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Africa Telecom: The ‘Favourite’ Opportunities (Ventures Africa, Oct. 8 2014)

Africa Telecom: The ‘Favourite’ Opportunities (Ventures Africa, Oct. 8 2014)

VENTURES AFRICA – Africa’s telecom sector remains one of the most sought after investment opportunities. Unlike in many other regions globally, the African telecom sector still offers significant growth potential.

Mobile voice and data revenues in Africa are projected to continue a strong growth projection over the next few years, whereas voice revenues are already declining or forecasted to decline in the near term. Sales in Africa (in U.S. dollars) are forecast to grow approximately 9.6 percent in 2014 and an average of 6 percent annually from 2015 to 2018, compared to a meagre 3.3 percent in 2013. The emergence of data usage in Africa accounts for a significant portion of Africa’s mobile growth, rising from approximately 14 percent of mobile service revenues in 2012 to a forecasted 26 percent to 27 percent in 2018.

The realization of an African mobile broadband network continues to drive these numbers. Fixed broadband line penetration remains less than 6 percent in sub-Saharan Africa. Higher rates of household penetration are recorded in North Africa as well as South Africa and Mauritius. Mobile broadband subscriptions in Africa accordingly represent the changing dynamics of ‘Africa’ internet usage, projecting to 800-plus million subscriptions in 2018 compared to 105 million in 2013 and a forecast of 174 million in 2014.

But what does this all mean? African markets are still complex with many challenges. Low revenue subscribers account for significant portion of African mobile users. African turf wars have escalated between old and new operators and banks (of all groups) as mobile payment offerings and data offerings become prime battling grounds for revenues. Consumer-based applications and related offerings are still relatively new with their creativity but will continue to rapidly develop and also add another nuance to the profitability landscape.

All that being said, this article picks my three favourite markets for telecom over the next couple years, based on the numerous nuances and moving factors in their local context.



First and foremost, the Ethiopian government has clearly stated it is not ready to open the market. But when the government liberalizes the market, operators will gain access to population approaching 100 million in the near term. Experts estimate that mobile phone penetration is between 30 percent and 40 percent in Ethiopia and forecast that subscriber growth in Ethiopia will remain one of the fastest growing countries for mobile users.

Lowering call prices and overall cost of ownership is key to achieving the best results in the country. Mobile data costs still hamper consumers. Businesses digest usage bills that approach $1000, says an investor, but low income consumers cannot cover the costs. Touching remote areas in Ethiopia is also the challenge in the country, continues the investor, but adding value-add products and applications, such as farming applications or mobile finance applications, could be a big boost to subscriber base.



Nigeria is still the ‘big kahuna’ in the African telecom sector. It is Africa’s largest mobile market with more than 125 million subscribers and a market penetration rate approaching 75 percent. The Nigerian market also retains one of the highest average revenue per user rates in Africa along with South Africa and Egypt. Price reduction is greater than 100% in the past three years and accordingly contributes greatly to the increased subscribership in recent years.

Nigeria also remains the biggest hotpot for the development of data products and services (along with Kenya). YouTube’s partnerships with Nollywood and Lagos TV in Nigeria and Voice of America’s SMS-based news services are just a few of the examples changing the Nigerian market. More investment in the applictaions space and the continued growth in voice and data services will further push Nigeria to the forefront of the telecom space.



Mali is definitely a ‘dark horse’ pick after the Islamic uprising in 2012. But mobile subscription has grown by an average of 30 percent-plus since 2010. The country is still very rural, best represented by the one of the world’s most isolated cities in the world in Timbuktu. Yet GDP growth is pushing above 5 percent in 2014 and should continue to increase in the near term. Malian government officials opine that mobile connectivity is key to achieving the necessary communication infrastructure to boost the country’s future economic growth potential.

The country’s ARPU is relatively moderate in the near term. But studies suggest that greater price depression, possibly approaching another 20 percent in reductions will induce greater usages and topline revenue results. Added capital support to building telecom infrastructure, however, may be the ultimate determining factor on where the country goes in the long term.

Honorable Mention:

Angola: Few licenses, emerging oil and gas sector, and increasing incomes.

Egypt: Rebounding economy and high ARPU

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