Services providers focus on emerging market potential

ALMOST 40% of Africa`s one billion people will be mobile phone subscribers by the end of this year, making this continent the world`s fastest-growing market for cellular networks. But this doesn`t mean doing business in Africa will be smooth going.

Delegates and attendees at the annual Informa AfricaCom conference, formerly GSM Africa, were almost unanimous in the view that Africa is one of the last markets in the world where money can really be made in the telecommunications market, but it means that certain issues, such as regulation, pricing, and allowing for a competitive landscape have to be overcome first.

"The demand for improved telecommunications infrastructure is not only being driven by consumer desire, but by African companies themselves, who are making great strides to establish themselves into markets apart from their home countries. Nigerian banks are a prime example of this," said Mike , COO of Gateway Communications.

He said these companies are African grown and not the remnants of the colonial-era conglomerates that dominated the economic landscape for so many years.

"These new companies most definitely want to do business with the same kind of ease as they have in their home countries and this is a real driver for all kinds of telecommunications services," Van den Berg says.

AFRICA`S FIERCELY COMPETITIVE LANDSCAPE

Mark Newman, chief research officer of Informa Telecoms & Media said the African mobile industry in particular is becoming fiercely competitive, especially in Nigeria that already has five main operators.

"Increased has proven to be the catalyst that brings down prices," he said. "Having one or two major players does not necessarily bring prices down in a market, but three or more most certainly does the trick."

Nigeria, whose market is far more deregulated than South Africa`s, has overtaken its southern peer in the connectivity stakes. Informa`s numbers show that the country has almost 12 million more subscribers than South Africa`s 42 million.

He said average revenue per user (ARPU) is falling as subscriber numbers grow, especially with the push into new rural markets, but it is in line with worldwide trends. The introduction of 3G and other valued added services does seem to have given ARPU a bit of a boost in South Africa and Nigeria.

HANDSETS STILL TOO PRICEY

"3G is a funny thing. It is usually one of two things, either it is a handset that is considered 3G capable or it is a sim card or dongle attached to a laptop. Either way, the cost of the devices is high, with 3G handsets at about $75 and laptops around the $400 mark. Compare that to a 2G handset that only costs $25 and you will see why most network operators still have 2G services," Newman said.

The theme of handset prices was also touched upon by SA`s CEO who pointed out in his presentation that the network operator wanted the price of 3G handsets to fall to between $30 and $40 per unit.

"We need to create a connected continent.  But, in order to do this, we need to overcome challenges such as the cost of devices and how we take Africa to the world and bring the world to Africa."

WIRED AND WIRELESS

Broadband was another issue that received attention, with vendors such as Qualcomm and Motorola offering various solutions that may, depending on what standards are adopted, be the definite connectivity mechanisms.

However, CTO made a point of saying that: "We still have a long way to go before broadband is a fact of life for most Africans."

Hay said that while wireless has two important characteristics, namely ease of roll-out and that it has become the de facto means of people communicating with other people, it will be fibre-optic cabling that will form the backbone of the networks.



Tags: Africacom