12 November 2013

Nigeria: Sub-Saharan Africa's Mobile Phone Growth Faces Challenges

Photo: Business Daily
Models of mobile phones.

Sub-Saharan Africa has been the fastest-growing region in the world for mobile phone users in the past five years, but companies now face many challenges as they seek further growth, a new report said Monday, according to The Wall Street Journal.

Mobile subscribers in sub-Saharan Africa have increased 18% a year for the past five years to total 253 million as of June 2013, said GSMA, a body that represents mobile operators world-wide, in a report. That figure represents a 31% penetration rate. GSMA forecasts the region's mobile users will reach 346 million by 2017.

While sub-Saharan Africa has posted the fastest growth in mobile subscribers, mobile penetration is the lowest globally, GSMA said. As companies seek to reach the remaining two-thirds of people in the region who don't have mobile access, they will have to overcome several hurdles including making handsets more affordable and working with governments on policy. Other challenges include high tax rates in some countries on mobile usage and poor infrastructure such as electricity, making it costly to run towers.

Mobile expansion could have big benefits for sub-Saharan Africa's economic growth, GSMA said in its report. The mobile industry accounted for 6.3% of the region's gross domestic product in 2012 and is likely to account for 6.7% this year. GSMA says that will grow to 8.2% by 2020.

The percentage of the population that uses a mobile phone ranges between 65.7% in South Africa and 20% in Niger. In Nigeria, which has been one of the fastest-growing markets for mobile phone companies in the region, only 29.5% of the population have a mobile-phone connection.

South Africa telecommunications company MTN Group Ltd. MTN.JO -0.21% has grown to become a major regional player helped by its early expansion into markets such as Nigeria. Now, though, the company has warned that competition is increasing and a tough economic climate in South Africa could slow growth.

On Monday, South African cellphone operator Vodacom Group Ltd. said its focus on pan-Africa expansion has helped to boost revenue. The market in sub-Saharan Africa excluding South Africa now accounts for 21.6% of Vodacom's service revenue, up from 19% a year earlier.

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