2012 Africa - Mobile Broadband, Data and Mobile Media Market

African mobile operators make up to 30% of their revenues with non-voice services

Wherever 3G mobile broadband services are deployed in sub-Saharan Africa, they quickly take over as the preferred means of access to the internet, provided that a suitable backbone network is in place. DSL services offered by national telcos on their typically underdeveloped fixed-line networks are quickly reduced to niche market status, as are most traditional ISPs reselling these services or offering their own wireless access.

The extensive national network infrastructure of the mobile operators and their large user bases for voice services place them in a dominant market position for data services as well. The additional revenue is welcome in an environment of shrinking average revenue per user (ARPU) in the mobile voice market.

In many countries in the region, national fibre backbone networks are being rolled out, and new international submarine fibre optic cables along the continent’s East and West coast are providing the bandwidth needed to connect millions to the internet, at much lower cost than previously when satellites were the only option. In many cases the mobile operators are building their own fibre backbones under converged licensing regimes.

North Africa has traditionally been in a slightly better position in terms of fixed networks, but even here mobile broadband is quickly outgrowing other access methods. Mobile broadband prices are often comparable to fixed broadband offerings or at least not far behind. In Morocco, Africa’s most penetrated DSL market with some of the lowest prices on the continent, 3G mobile broadband jumped from virtually zero to over 40% of all connections within two years after launch and made up more than 80% by mid-2012.

Using dual carrier DC-HSPA+ technology, up to 42Mb/s are currently being offered by 3G mobile operators in Africa. The continent's first commercial LTE 4G networks have been launched in Angola, Namibia, Mauritius and Tanzania, with South Africa, Nigeria, Kenya and Egypt expected to follow soon. Problems with frequency spectrum allocation have delayed commercial LTE services in some countries.

The arrival of low-cost smartphones, locally manufactured in Ethiopia for example, has lowered the barrier of entry to the internet market for African consumers. South Africa's leading operator Vodacom has seen the number of smartphones on its network grow at almost twice the rate of 3G USB modems, reaching a combined total of more than six million or 20% of the subscriber base in early 2012. Average smartphone data usage almost doubled in the past year to reach 92MB per month.

The highest number of active mobile broadband subscriptions as a percentage of the population is found in Ghana, at 23% in early 2012.

Mobile broadband and data services also make a significant contribution to the revenues of African cellcos. Leading operator Safaricom in Kenya made almost 30% of its revenue with non-voice services in 2011/12. More than half of this was generated by its tremendously successful M-Pesa mobile banking service, with the other half roughly evenly split between SMS and mobile broadband.

In the continent’s most advanced markets, m-commerce, mobile content, applications and media have reached a level of development that is beginning to foster an associated advertising and marketing industry.

Market highlights:

• UMTS-based 3G mobile networks have been launched in more than half of all African countries;
• Most operators have included High Speed Packet Access (HSPA) 3.5G mobile broadband in their service offerings, providing up to 42Mb/s;
• Commercial LTE 4G services have been launched in four countries, with trials of the technology ongoing in several others;
• Another 3G technology, CDMA2000 1x EV-DO has been deployed in around 30 African countries, offering up to 3Mb/s;
• There are significantly more 3G mobile broadband users than DSL subscribers in key African markets;
• New international fibre optic cables and national backbone networks support broadband growth;
• African mobile operators make up to 30% of their revenues with non-voice services;
• Mobile data services have helped to reverse declining average revenue per user (ARPU);
• The M-Pesa mobile banking service in Kenya carries about 20% of the country's entire GDP.

Data in this report is the latest available at the time of preparation and may not be for the current year.