The Sub-Saharan Africa (SSA) region has recently experienced remarkable growth in terms of subscriber numbers. However, the need to expand networks to less-populated areas, the price sensitivity of new end users and mobile market saturation in urban areas will pose threats to operators' profitability.
Analysys Mason has identified a number of hot topics for 2012 for stakeholders in the telecoms market in the SSA region. These trends highlight the main issues currently facing operators – network coverage, cost reduction and improvement in profitability – and anticipate developments in the telecoms market in the year ahead.
Mobile penetration in SSA is approaching saturation, leading mobile operators to take steps to retain established customers consumers and reduce churn
The recent price wars between operators attempting to attract new subscribers has helped to raise subscriber numbers, but has had a negative impact on operators' bottom lines. This situation is further exacerbated by the slowing growth in mobile penetration – particularly in urban areas – and by the low usage levels of consumers with multiple SIMs. As a result, operators will look for solutions that will support creative customer loyalty schemes. Analysys Mason also believes that serving less-populated areas will not yield sufficient revenue to offset acquisition costs, because consumers in those regions tend to be more price sensitive and are mostly net receivers of calls.
The SSA region has the lowest penetration of broadband in the world, and most connections are via mobile networks
Fixed infrastructure for broadband services is limited outside urban areas, so mobile broadband will continue to account for the majority of broadband connections. Analysys Mason estimated that there were only 18.3 million broadband connections in SSA at the end of 2011, and that the total will reach 50.2 million by 2016. The proportion of USB-modem-based mobile broadband connections will increase slightly, from 82% of broadband connections in 2011 to 84% in 2016.
The increasing availability of 3G networks will make mobile broadband more accessible, but cost continues to be an obstacle to more-widespread take-up. The mobile broadband penetration rate will only increase to 4.5% of the population in SSA by 2016 (see Figure 1), according to the latest forecasts from Analysys Mason's The Middle East and Africa regional research programme.
Figure 1: Mobile broadband connections and penetration in Sub-Saharan Africa, 2010–2016 [Source: Analysys Mason, 2012]
![Figure 1: Mobile broadband connections and penetration in Sub-Saharan Africa, 2010–2016 [Source: Analysys Mason, 2012]](/PageFiles/24906/Figure_1.png)
Interest is increasing in wholesale business models to support mobile broadband
Telecoms authorities are mandating or encouraging wholesale models when awarding licences, as previous awards have not yielded enough benefits for consumers. For example, the governments of Kenya and South Africa are making wholesale offerings a condition of the award of LTE spectrum, and in Tanzania, the wholesale model was boosted by the award to Rural NetCo of a 3G licence. Analysys Mason expects that other countries in SSA will follow this trend in an attempt to accelerate the deployment of mobile broadband.
Network sharing offers a means to expand coverage into rural areas and reduce costs
Operators will increasingly consider network-sharing and outsourcing opportunities as a means of reducing opex and capex. Some operators in the region, including Tigo and Vodafone in Ghana, have already sold their towers or given management of them over to third-party tower infrastructure operators, such as ATC Tower Ghana and Helios Towers. Governments could also mandate network infrastructure sharing in order to enhance coverage and to encourage economic and social development in less-populated areas. Analysys Mason expects to infrastructure sharing and outsourcing activity to increase in the region during 2012.
Discussions have also been initiated around the release of digital dividend spectrum that is suitable for coverage of large areas – particularly in Ghana, Nigeria and South Africa – but spectrum is not expected to be available this year.
Increased international connectivity from new submarine cables should help to reduce broadband pricing
The activation of new submarine cables, such as ACE and WACS, in 2012 should help to reduce operators' costs and increase capacity, which should ultimately translate into lower end-user prices for broadband services.
Analysys Mason's new report, The Sub-Saharan Africa telecoms market: trends and forecasts 2011–2016, analyses the most important trends that are affecting fixed and mobile telecoms services in this region and assesses the impact that they will have in the next five years.