End of the African telecoms boom?

The upsurge in sub-Saharan Africa mobile telecommunications seems to be subsiding as companies continue to overcrowd the market while trying to gain more clients. Sizeable investments and how businesses aim to win over customers’ favour was investigated in a new report.

As one boom ends, another begins Bitange Ndemo, secretary of the Kenyan Ministry of Information and Communications, believes. (image: file)

The Morgan Stanley Research report, a global investing firm, says as firms backed by big money, like Bharti Airtel, continue improving their network coverage and decrease tariffs, Africa will become more competitive. Old timers, such as MTN and Safaricom, that have enjoyed market dominance are set to be affected the most. According to the report, the boom will be replaced by market driven innovation, new products and expanding data services.

“All companies are focusing on driving data usage, and new services to reduce churn. The most important are mobile money services like M-Pesa, where innovation take-up is high,” the report says.

“We expect mobile revenues to grow from 3,4% of gross domestic product (GDP) in 2011 to 3,7% by 2015, as we believe mobile revenue growth will outpace GDP in the next four years,” the report says.

Bitange Ndemo, secretary of the Kenyan Ministry of Information and Communications, says there is little room for new entrants in the local market.

“Unfortunately, there has been market erosion of about 20%, mostly because of competition that has seen cuts in tariffs in the sector. A new entrant would have a lot of problems as the four firms (Safaricom, Bharti Airtel, Yu Mobile, Orange) are struggling due to stiff competition,” Bitange told Daily Nation.

Industry analysts agree with his conclusion. ”What we are seeing is a correction of factors like the supernormal profits that some telecoms have been enjoying in the past,” Techie Makau, a Nairobi-based telecommunications consultant, said.
Makau added that providers now have to focus on provision, customer service and value addition. In the Kenyan market, the average price per minute fell by 80% due to competition largely from Bharti Airtel, between Sh2 and Sh4 ($0.03-0.05).

Despite the report, Bitange believes the data market is set to kick off next. Kenya’s internet penetration is only 30%, so once fibre optic cables expansion starts he believes we are set for another boom. “The data market is beginning to take shape as the fibre optic network continues to expand,” he said, adding: “this will see a lot of consumption of broadband… and that is what the companies should be looking at.”

Nico Gous

February 21, 2012/by actualize

3G available in the Republic of Congo (Brazzaville)

The title of this video from ABN is misleading – 3G service has been launched for the Republic of Congo (Brazzaville) and not for the Democratic Republic of Congo.

Last month, we mentioned that Bharti Airtel had plans to roll-out 3G services in seven African nations. Well, that day has come for Congo-Brazzaville. On paper, October 25, 2011 marks a historic day in the telecommunication chronicles of Central Africa.

Let it sink in. 3G mobile service (HSPA+, 21Mbps) is available in Brazzaville. Press releases and media stories tout the promise of enhanced multimedia functionality for subscribers in the region. Youth will supposedly have faster access to mobile social media. Businesses will be able to perform video calls on-the-go. Indeed, 3G is theoretically supposed to close the “digital divide,” but will it instead worsen the gap with the wealthy using the service and the poor still relying on 2G, cafes, or no access at all?

ABNDigital’s interview with Tiemoko Coulibaly, CEO Airtel Africa, Francophone leaves many answers on the table:

When asked why it took so long to get 3G to central Africa, he replied that governments take time to issues licenses.
Infrastructure? Something along the lines of 2G systems serving as a basis.
Demand? …is important. Youth are especially interested and “the demand is there.”
Local ecosystem? IBM is taking care of IT needs and will help build local ecosystem.

Either way, the Republic of Congo’s Internet situation has come a long way since 2009 when one hour of unreliable Internet access could cost upwards of CDF 1,000 (nearly 2 USD). Progress takes time. 3G access from Airtel will encourage competitors to also offer 3G (or 4G, but let’s not get ahead of ourselves) – a move that will eventually lower prices and increase the quality of service. For now, though, we should applaud the government of Congo-Brazzaville for awarding a 3G license and hope they give the technology the support it needs to benefit the people.

October 26, 2011/by actualize