20 June 2018

Nigeria: High Broadband Rate, Slow Connectivity Cut Mobile Phone Shipment By 6.4%

Shipment of mobile phones to Nigeria in quarter one fell by 6.4 per cent, owing to two identified challenges of expensive broadband rates and slow Internet connectivity.

The fall in smartphone shipment was not peculiar to Nigeria alone, South Africa, also witnessed cut in shipment, falling by 27.4 per cent.

Generally, mobile phone shipment to Africa came down by 6.3 per cent in Q1 due to the challenges experienced in the two major markets of Nigeria and South Africa.

Insights from the International Data Corporation (IDC), a global technology research and consulting firm, revealed that a total of 52.1 million mobile phones were shipped in Q1 2018, down 6.3 per cent quarter on quarter (QoQ) and 3.9 per cent year on year (YoY).

Senior Research Manager at IDC, Nabila Popal, said Nigeria's modest performance could be attributed to the fact that smartphone adoption continues to be hindered by expensive broadband rates and slow Internet connectivity.

Indeed, The Guardian checks showed that Nigeria with 10.04mbps, against global's 23.57mbps, ranked 108th out of 125 countries examined in mobile Internet download speed as at May, on Ookla's Speedtest Global Index.

The Index also showed that the country's rank for fixed broadband speed dropped significantly from 109th position to 116 out of 135 countries examined. The speed also dropped to 8.91mbps against world's 45.48mbps.

Popal said the drop in South Africa was simply down to seasonal factors, with Q1 traditionally being the slowest quarter of the year and unable to match the buoyant sales seen in Q4, traditionally the strongest, when demand is stirred by Black Friday and the Christmas season.

"While South Africa is one of the continent's most developed markets, a large proportion of the market still centers on low-end to midrange devices priced below $150. Affordable smartphones that fall into this price range have seen a lot of growth over the last two years, fueled by local brands like Mobicell, MINT, and Vodacom. With disposable income limited for the majority of consumers, most spending on mobile devices takes place in Q4, leading to an inevitable drop-off in Q1," he stated.

Looking at smartphones in isolation, IDC noted that shipments declined 4.5 per cent QoQ for the first quarter of the year to total 20.4 million units. This represents a decline of 4.4 per cent YoY, which is actually an improvement on the 13.7 per cent YoY decline seen in Q4 2017. Transsion brands continued to lead the smartphone category in Q1 2018 with 32.1 per cent share of the market's shipments, followed by Samsung in second place with 25.4 per cent share.

In the feature phone space, shipments totaled 31.7 million units in Q1 2018, down 7.4 per cent QoQ and 3.6 per cent YoY. Feature phones continue to account for the majority share (60.8 per cent) of Africa's overall mobile phone market and their resilience in this region can be attributed to factors such as their affordability and long battery lives. Telco and Itel continued to dominate Africa's feature phone market in Q1 2018 with a combined unit share of 57.8 per cent.

According to Research Manager at IDC, Ramazan Yavuz, Feature phones remain a viable option throughout the continent as hardening economic conditions have taken their toll on consumer spending.

"The volatile exchange rates that have inflicted many countries across the region are delaying the penetration of affordable smartphones into wider segments of the consumer base, which is why we continue to see feature phones account for such a large share of the overall market," he stated.

Looking ahead, IDC expects Africa's overall mobile phone market to grow 0.5 per cent QoQ in Q2 2018, while shipments for 2018 as a whole are forecast to decline 0.6 per cent YoY.

Demand for feature phones is expected to remain strong, although IDC expects vendors to drive smartphone uptake by offering more features in affordable price bands.

"The local brands that are equipped with a strong knowledge of local needs and the flexibility to adjust mobile phone prices locally will strongly appeal to African consumers, and their growth will accelerate the uptake of smartphones in the mid-term," Yavuz stated.

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