The African
Mobile Market
Market Size – Subscriber Growth and Penetration
During 2004 and 2005 Africa saw overall mobile market
growth surge forward faster than any other continent
in the world, almost doubling the size of the entire
African market in those 2 years, and that growth should
continue for some time. As Africa relieves its debt
burden, continues to liberalise its telecoms markets
and open up to further competition and foreign investment,
the mobile sector will be a vital component of future
growth on the continent. Africa is a vast market of
almost 900 million people, and just 14 percent of them
currently have a mobile phone.
2005 was a significant year for the mobile industry
in Africa, as the market passed the all important ‘100
million subscribers’ milestone. By the end of
2005, the African continent is home to a little over
113 million mobile subscribers, but the region is set
to see significant growth in mobile subscribers between
2006 and 2011. Our forecasts project the total subscriber
base in Africa to reach 378 million by the end of 2011,
net additions of 265 million new subscribers over that
period.
Whilst Asia will see the greatest number of net additions
over the next 6 years, Africa will emerge as the fastest
growing mobile market in the world, with total mobile
subscribers in the region expected to increase at a
CAGR of approximately 22.2 percent during the period
from 2005 to 2011, resulting in a mobile subscriber
base of 378.62 million by the end of 2011.
Mobile penetration across most of the region is still
quite low despite the fast growth in recent years. Overall,
the region had a mobile penetration rate of 10.3 percent
at year-end 2004, rising to approximately 14.3 percent
by the end of 2005. Penetration is forecast to rise
to 41.8 percent by the end of 2011. Pre-paid subscriptions
are highly dominant in the region and constitute approximately
95 percent of the total subscriber base.
Figure 1, below, shows forecast growth of mobile
subscribers in Africa for the 10-year period from 2002
to 2011.
Key Markets & Opportunities
Many country markets in Africa are still not very
competitive, in fact 60 percent of countries have only
two operators - or less. However, a few examples, such
as Algeria, Democratic Republic of Congo, Nigeria and
South Africa, have more than 2 players and things are
improving rapidly across the region. With the proposed
privatisation of state-owned operators in Morocco, Nigeria
and Tunisia and the proposed issuance of a third GSM
licence in Egypt, competition should increase soon and
markets should become healthier for it.
Nigeria, which has the largest population in Africa,
had reached only 7.6 percent penetration by the end
of 2004. But Nigeria has 4 network operators fighting
for growth and this healthy competitive environment
helped penetration rise to 14.4 percent by the end of
2005. Nigeria emerged as one of the fastest growing
mobile markets in the region, with a CAGR of 147.3 percent
during 2002-2004, beaten only by rapid growth in Algeria.
This fast paced growth in the Nigerian mobile market
has been the result of the liberalisation policy and
consequent competition in the market, a demonstration
of the power governments have in expediting such development.
The number of subscribers in Nigeria is expected to
continue growing at a CAGR of 30.2 percent during the
period 2005-2011.
South Africa, however, has the highest mobile penetration
on the continent standing at 67 percent at the end of
2005, and this is also Africa’s most developed
market, with strong competition among the three major
players and 3G services launched back in 2004. According
to our forecasts, the total number of subscribers will
increase at a CAGR of 4.7 percent during 2005-2011 to
reach 39.06 million, over 90 percent penetration, by
the end of 2011.
Tunisia, which has the second highest level of mobile
penetration in the region, is also expected to register
a CAGR of 9.7 percent during 2005-2011, driven by the
privatisation of state-owned Tunisie Telecom in 2006
and launch of GPRS and EDGE technologies. In fact, thanks
to Tuniusia’s relatively small population of only
9 million, mobile penetration in the country is expected
to exceed 80 percent by 2009.
Different countries in Africa are currently at different
stages in their market evolution, with a few markets,
such as Ethiopia and Rwanda, still operating as monopolies
and some at the other end of the scale facing maturity
and intense competition, such as South Africa.
As the example of South Africa demonstrates, with
Virgin Mobile soon to be launching the first MVNO on
the African continent, the market conditions in Africa’s
more competitive markets offer ample MVNO and MVNE opportunities.
As MVNOs proliferate worldwide, particularly in Europe
and North America, Africa may be the next exciting target
market for MVNO growth, where regulatory market conditions
allow.
Approximately 95 percent of all subscribers in Africa
are pre-paid users, and the continent is rife with cultural
diversity. In some markets there are many languages,
religious groups, political beliefs and cultural differences.
For example Nigeria, the most populous nation in Africa,
with over 125 million inhabitants, is home to over 250
separate ethnic groups. Locally and ethnically-relevant
content is the niche of the MVNO, and fast maturing,
fast growing markets like Nigeria, where growing competition
is decreasing ARPU and increasing churn, may prove to
be highly competitive MVNO markets.
For more information about the African Mobile
Market, read our report Opportunities
in the African Mobile Sector
Disclaimer:
Portio Research Limited.
Published 2006 by Portio Research Limited. © Copyright
2006.
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