African mobile growth set to slow

At one of  mobile phone shops in Nairobi, a man looks on displays. (Reuters)

At one of mobile phone shops in Nairobi, a man looks on displays. (Reuters)

By REUTER

African mobile subscription growth will fall by two thirds by 2017, pointing to new challenges for regional operators.

The uptake of new mobile subscriptions in sub-Saharan Africa is set to slow after five years posting the highest growth rates in the world, according to a report from GSMA, an association of mobile operators.
The number of mobile subscribers in sub-Saharan Africa grew by 18 percent a year between 2007 and 2012 as operators increased connectivity and the cost of mobile devices fell. By mid-2013, there were 253m mobile users across the region, meaning that just under one in three people has access to a mobile phone. Those rates will increase to 346m by 2017 as       more customers gain access to affordable devices, GSMA estimates.However, that represents a compound annual growth rate of around 7 percent – substantially lower than that of the last five years – according to Peter Lyons, GSMA’s director of spectrum policy for Africa and the Middle East. “The main reason for the slowdown is the next 100m connections are going to come from rural and lower-income populations,” Mr Lyons says. “It will be much more costly to reach those people both in terms of device affordability and network coverage and will require concerted investment by the mobile industry.” GSMA estimates that the average revenue of mobile users across sub-Saharan Africa stands at about $13.6 per month, but says that new users are likely to fall in the bracket of $7-9 per month, meaning companies face challenges in making mobile contracts affordable. “For operators to generate a return on investment is going to be challenging,” Mr Lyons argues. Mobile operators have invested $44bn over the last six years and will be required to spend more in the future as they extend coverage to rural areas and deploy 3G and 4G networks, the Sub-Saharan Africa Mobile Economy report says. However, prohibitive tax regimes could deter investment. Taxation as a proportion of the cost of mobile ownership is already higher in sub-Saharan Africa than the global average, and governments are increasingly looking to the mobile industry as a source of much-needed revenue. Twenty countries in the region have levied customs duties on mobile handset imports driving up costs in a region where affordability is paramount; some, including Kenya, are taxing mobile money transfers, hitting price-sensitive users; and others have placed a surtax on inbound international calls. “There are very creative taxes being imposed on airtime, SMS, handsets, international traffic, mobile data, and this is something that is likely going to get more challenging as governments realise it is a source of easy tax revenue,” Mr Lyons argues. “Some taxes are really counterproductive when it comes to improving affordability and uptake.” The mobile sector has had a transformative effect on sub-Saharan development over the last decade. The contribution of the mobile industry to sub-Saharan Africa’s GDP will rise to 8.2 percent by 2020, up from 6.3 percent in 2012 – already a higher proportion than any other region in the world – GSMA estimates. Rising subscriptions have brought new businesses online, generating growth outside of the mobile sector. Between 2015 and 2020 mobile internet will have a net economic impact of $200bn across sub-Saharan Africa, generating approximately 16m new jobs across the continent, Mr Lyons says. “Business activity is increasing as a result of mobile broadband coverage. It allows the creation of new job opportunities which were not possible five or 10 years ago,” he explains. But sub-Saharan Africa still has the world’s lowest mobile penetration rates. The percentage of the population that uses a mobile phone varies from 65.7 percent in South Africa to 20 percent in Niger.

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Nairobi Digest

Kenyan Journalist