Mobile in Africa: the land of opportunity


Africa and the Middle East will lead the world in terms of the percentage of mobile broadband subscriptions through 2012. This was the title of the recent broker report that I received today.

Emerging Opportunity?: Several different information sources examine the use of mobile broadband as an Internet access technology for PCs, excluding the use of mobile networks for Web browsing on smartphones or other handsets. The factors that affect future adoption of mobile broadband in markets across the region will be several, but it’s amazing to see how quickly operators have adapted their mobile broadband strategies in the recent years.

Although Africa and the Middle East generated 10 percent of global mobile revenue in 2008, the region contributed only 3 percent of global mobile data revenue. However, the region will double its share of global mobile data revenue by 2014 due to its growing popularity of mobile broadband in the region, in rich and poor markets alike. We expect mobile broadband adoption in Africa and the Middle East to grow faster than the global average over the next five years, with the subscriber total increasing at a CAGR of 33 percent to reach 32.2 million by 2014.

Just as markets in Africa and the Middle East were starved for voice communications prior to the mobile era, so too were they starved for Internet access: Inadequate fixed infrastructure and insufficient competition in the fixed market meant that services were either unavailable, unaffordable, or both. The launch of 3G services in much of the region means that its Internet market is now on the brink of a similar makeover as when the advent of mobile communications famously and dramatically transformed AME’s voice telecommunications sector.

The region’s great unmet demand for Internet access, combined with its generally inadequate fixed networks, means that from 2008 through 2012, Africa and the Middle East will lead the world in terms of the percentage of broadband subscriptions that are mobile. Mobile operators are eager to take advantage of this opportunity, routinely offering mobile broadband as their first or even their only 3G service following their 3G network rollouts. There’s an interesting essay that one of our external resources sent us yesterday and that I’d like to share with the whole of you. It basically confirms the inmense potential for Africa’s mobile communication industry.

Enjoy the reading, CVA – Thanks Travis!

Mobile in Africa: the land of opportunity
According to a May 2008 Wireless Intelligence report, African mobile subscribers were set to pass the 300 million mark by the middle of this year (which sees the continent surpassing North America in terms of subscriber numbers). “When fully exploited, this is a billion dollar industry, which contributes 5.4 per cent to the global revenues – a figure close to US$34.4 billion,” says Travis Mulenga, a consumer insights expert working in the African mobile communications industry. “With 95 per cent of subscribers on pre-paid platforms, this is a cash business with good revenue streams”.

Africa is an emerging market for mobile and there is a real opportunity with accelerated growth, says Andy Smith, sales director, AdMob EMEA. Africa still has a way to go before its penetration rates match those of European states, but this is good news for those looking to enter the market. “There is massive potential simply because of the mass of the population and lack of penetration, as well as an absence of traditional media,” says Eddie Groenewald, CEO, Multimedia Solutions.

“The greatest potential lies in higher-income, high potential and greater mobile phone penetration countries,” says Mulenga. In particular, Nigeria, Kenya, Namibia and Uganda are earmarked as viable markets. “Ghana’s stability and good governance is ideal, while the English speaking West African countries are also viable,” says Groenewald. And in countries with a large youth market, says Mulenga, we can expect to see a higher number of mobile content users (research has shown that youths access the Internet via their mobile for MMS, e-mail, mobile video, ringtones, etc).

Aside from growing competition, there are significant challenges to be faced in these markets, including the limited network coverage, affordability of products and services, technical barriers, limited urban infrastructures, uncertain legislative environments, illiteracy, unreliable electrical supply, and so on. Yet subscriber numbers are growing, and there is an increased demand for services and products.

“Since revenue growth has reduced, they are now pushing for the uptake of data-based products such as SMS, MMS, Mobile portals, GPRS/EDGE, asides other multimedia services,” says Mulenga.  He adds that the forecast growths in the mobile industry at a global level are in developing countries, where the majority of subscribers are categorized as low ARPU (average revenue per user) users. “This entails that alternatives to voice will now become increasingly important in their contribution to revenue,” he says.

Chris Rolfe, CEO, Mobilitrix, stresses that text services are the way to go, but you need reliable partners to do this. “Text isn’t necessarily the cheapest. Unstructured Supplementary Service Data (USSD) is the cheapest as long as it’s not WAP. USSD with SMS means the receiver takes it with them,” he says.

A lack of media channels and education means that MMS is set to play a large role in Africa, especially as illiterate people own cellphones according to Groenewald. He adds that there is huge potential for downloadable content. Groenewald says that it is important to integrate basic models, such as WAP and text messaging. However he warns that without GPRS, it will be difficult to roll out media rich content

According to Mulenga, FMCG retail outlets are among the leading mobile content providers, as well as cosmetics makers, luxury goods retailers, music labels, movie theatres, and so on. Can local brands and companies look forward to multiple country campaigns? They can be done, says Groenewald, but language barriers and the variety of regulatory issues from one country to the next have to be taken into account. “Bottlenecks may exist as data speeds vary across the continent, carrying different customer experiences,” says Mulenga.

With 188.5 million additional subscribers forecast for 2007-2011, the potential for Africa’s mobile communication industry is immense, says Mulenga.

Article source: Marketing Mix – http://www.marketingmix.co.za/pebble.asp?relid=5946


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