January 3, 2023
Africa’s telecom sector will be the fastest-growing industry in the coming 5 years.
There has been rapid development in the African mobile communication market in recent years. The evolution of services offered has led to an increased adoption of mobile technology, such as the offering of exclusive handsets and built-in services (e.g., mobile money). However, saturated markets and uneven responses to consumer preferences will continue to challenge the industry.
MTN, the largest mobile telecommunications provider in Africa, continues to lead the way on the continent. MTN’s revenue is estimated to be 2.75 billion USD in Nigeria and 2.67 billion USD in South Africa, and it consists of a user base of around 227.3 million. Following MTN, other crucial actors in the industry include Orange Africa, Vodacom, Airtel, and Safaricom, with Safaricom exclusive to Kenya, while the other networks have a wider range across 14–32 countries in Africa.
While 3G remains the dominant connectivity technology in Sub-Saharan Africa, there will be a decline in this connectivity as users start to adopt 4G and 5G connectivity. Telco’s across the continent are shifting their focus towards mobile money, platform businesses, and 5G connectivity. These moves are in line with consumer needs, with more consumers concerned with network quality as compared to prices.
Consumers are moving away from voice/call plans and are more geared towards data plans. This is due to the increasing relevance of video content, social media, and messaging as key communication, banking, and sales streams. Telco’s must pay attention to this trend in order to offer products and services that cater to the necessities of today's communication needs.
The key challenges noted for Telco’s in Africa are the high costs of mobile devices and the low internet connectivity, especially in rural areas. Networks can win over consumers with more bundles and offers and curb these challenges, especially with cheaper mobile data plans. Security is another issue that telco’s must pay attention to. Africa is losing around 1.59 billion USD a year due to fraud.
It is vital that policy measures are put in place to support network investments to improve the affordability of these digital services in Sub-Saharan Africa. Telco's investments must shift to a customer-centric approach as opposed to a product-based approach to improve the customer experience. With the increasing use of mobile money and consumers using their phones to pay, innovative banking services can capture more demographic segments, specifically lower-income and unbanked consumers.
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