Telecommunications in Africa




Telecommunications in Africa











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Telecommunications in Africa

by Faulkner Staff

Copyright 2022, Faulkner Information Services. All
Rights Reserved.

Docid: 00014338

Publication Date: 2207

Report Type: MARKET

Preview

Africa is a vast continent with a growing, but still inadequate,
telecommunications presence. According to Internet service provider
AFR-IX, in a globalized world marked by the digitalization of the
economy, Africa is the unfinished business that can no longer wait.
Improving connectivity on the African continent is one of the great
challenges of the 21st century and represents a market with magnificent
potential for the telecommunications sector.

Report Contents:

Executive Summary

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As shown in Figure 1, the African continent is enormous, spanning 11.7
million square miles, or more than three times the area of the US
(including Alaska and Hawaii).1

Figure 1. Africa Political Map

Figure 1. Africa Political Map

Source: Wikimedia Commons

In addition to its size, Africa is also a diverse continent, featuring:

  1. A exceedingly large number of political jurisdictions; Africa is home
    to 58 separate countries (or dependencies). See Table 1 for Africa’s
    largest nation-states.
  2. A population divide, with high-density urban areas (like Lagos,
    Nigeria), and very low-density, utility-poor rural areas.
  3. A beautiful but often punishing landscape featuring large desert
    expanses, savannas, and rain forests.
  4. A general deficit in education, healthcare, proper policing, and other
    social services.
  5. A legacy of exploitation of its precious minerals and other
    commodities.
  6. A recent history of underinvestment, particularly by its former
    colonial occupiers.
  7. A fractured telecommunication and entertainment environment.
Table 1. African Countries With the Largest Population (as of 2020)
in 1,000 individuals)
No. Country Population No. Country Population
1 Nigeria 206,140 6 South Africa 59,309
2 Ethiopia 114,964 7 Kenya 53,771
3 Egypt 102,334 8 Uganda 45,741
4 DR Congo 89,561 9 Algeria 43,851
5 Tanzania 59,734 10 Sudan 43,849

Source: Statista 2022

With a young,
dynamic workforce, Africa has entered the 21st century with the collective aim of
joining the global economy by increasing its internal and external
connectivity. Internet service provider AFR-IX Telecom summarizes the
situation as follows:

“In a globalized world, marked by the
digitalization of the economy, Africa is the unfinished business that can
no longer wait. Improving connectivity on the African continent is one
of the great challenges of the 21st century and represents a market
with magnificent potential for the telecommunications sector.”2

Market Dynamics

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Market Size

Underserved from a telecommunications perspective, at least in comparison
to more mature markets like the Americas and Europe, Research and Markets
predicts that the Africa entertainment and telecommunication market will
realize a respectable compound annual growth rate (CAGR) of 11.2 percent
between 2021 and 2026.3

Market Composition

Research and Markets reports that:

While smartphone penetration is increasing (“more than 290 million people
in North Africa use mobile phones”), the use of mobile internet services,
particularly in Sub-Saharan Africa, has not kept pace.

More promisingly, “Local companies, foreign investors, and global players
have all made a significant investment in the continent. Domestic
infrastructure sharing, cross border, and in-country mergers, and
governments responding to the opportunity to regulate and to auction
spectrum and licenses are some of the major factors playing a role in the
growth of the telecommunication and entertainment market in the region.”

As with the rest of the world, “The emergence of social media is
disrupting the industry. and players are switching from traditional
towards digital platforms. Such shifts are facilitating efficient
production, distribution, and consumption of content through mobile
phones, [thus spurring mobile] market growth.”4

Affecting a Mobile/Fixed-Line Balance

Given the physical, political, and other impediments to establishing
fixed-line infrastructure in Africa, the continent’s current state of
connectivity could not have been achieved without the rapid advances in
mobile technology made over the past two decades.

As analyst Henry Lancaster observes, “Given the poor fixed-line
infrastructure in most countries across Africa, voice and data services
across the region are greatly dependent on mobile networks. In the
majority of markets, including those with better developed fixed
infrastructure such as South Africa, Nigeria, and Kenya, up to 98 percent
of all voice and data connections are via mobile networks.

“During the last two to three years, national governments and telecom
regulators have striven to improve fixed infrastructure with the wider aim
of developing economic growth based on digital services and connectivity.
This work is principally focused on delivering fiber-based connectivity.
Since the amount of copper infrastructure (DSL or HFC) used for broadband
is so negligible, governments and private firms, including telcos as well
as regional players such as Liquid Intelligent Technologies, are investing
in fiber rather than in older technologies.”5

Market Leaders

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As analyst Luis Monzon reports,6 the top five telecom companies
in Africa are MTN Group, Orange Africa & Middle East, Vodacom Group,
Airtel Africa, and Safaricom, as described in Table 2. The rankings are based on the companies’ total annual revenue and number
of subscribers.

Table 2. Top 5 Largest Telecom Companies in Africa
Rank Company Description
1 MTN Group MTN Group is Africa’s largest mobile network operator. MTN
provides voice, data, fintech, digital, enterprise, wholesale, and
API services to more than 270 million customers in 19 markets.
2 Orange Africa & Middle East Orange supports digital transformation initiatives in Africa and
the Middle East. With a presence in 18 countries – mostly in Africa
but also Jordan in the Middle-East and Belgium in Europe – one
African in ten is an Orange customer.
3 Vodacom Group Vodacom Group is a South African mobile communications firm,
offering its services to more than 32 African countries,
including Nigeria, Zambia, Angola, Kenya, Ghana, Tanzania, and more.
4 Airtel Africa Airtel Africa is a multinational company that provides telecommunications
and mobile money services in 14 countries in Africa, primarily
in East, Central, and West Africa.
5 Safaricom Safaricom is the largest telecommunications provider in Kenya,
owning over 90 percent of the market. It is also one of the most
profitable companies in the East and Central Africa region.

Source: African Technology Advisory (Pty) Ltd.

Market Futures

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Although the prospects for telecommunications – and telecommunications
companies – in Africa are excellent, telecommunications planners must be
cognizant of several factors:

Young People – “Africa is the only region in the world where the
youth population is increasing. By 2050, Africa’s young people, i.e.,
those [under] 24 years old, will increase by nearly 50 percent.”7
Expect telecom services, especially entertainment, to be heavily skewed to
this influential demographic.

Chinese Involvement – Analyst Jie Xi warns that
“Telecommunications networks funded and built by China are taking over
Africa’s cyberspace, a dependence that … puts Beijing in a position to
exert political influence in some of the continent’s countries.”8

5G Deployment – Seemingly always a generation behind, the African
telecoms have been slow to embrace 5G. As analyst Emmanuel Abara Benson
reveals, “Deployment of the fifth generation network across Africa has
been very slow. As a matter of fact, only six African countries have so
far launched the network, according to checks by Business Insider Africa.
And even at that, most of these launches are not even commercial in
scope.”9

Consolidation Is Coming, According to One Insider

Ralph Mupita, CEO of the MTN Group, believes the future of
telecommunications in Africa lies in consolidation, with two or three
major players dominating the market.

“Having a market that is saturated by a number of players is not
sustainable. There is simply not a big enough profit pool to meet the
return and other financial objectives of a number of industry players.
Within the next few years, we will see a sector dominated by two to three
major players who have the capabilities and capacity to rally massive
amounts of capital investment locally and abroad, to sustain the
industry’s expansion. MTN has every intention of being one of the scale
operators in all its markets.”10

References

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1 National Geographic Society.

2 “The Challenges of Connectivity in Africa at Digital Infra
Africa 2022.” AFR-IX Telecom. May 4, 2022.

3-4 “Africa Entertainment and Telecommunication Market –
Growth, Trends, COVID-19 Impact, and Forecasts (2022 – 2027).” Research
and Markets. 2022.

5 Henry Lancaster. “Africa – Mobile Network Operators and
MVNOs.” Paul Budde Communication Pty Ltd. April 26, 2022.

6 Luis Monzon. “Top 10 Largest Telecom Companies in Africa.”
African Technology Advisory (Pty) Ltd. September 2, 2021.

7 “Africa Entertainment and Telecommunication Market – Growth,
Trends, COVID-19 Impact, and Forecasts (2022 – 2027).” Research and
Markets. 2022.

8 Jie Xi. “Analysts: China Expanding Influence in Africa Via
Telecom Network Deals.” Voice of America. August 14, 2021.

9 Emmanuel Abara Benson. “Could This Be Why African Telecom
Operators Are Slow in Rolling Out 5G Network?” Africa.Businessinsider.com.
May 28, 2022.

10 “MTN CEO, Ralph Mupita Comments on the Future of the
Telecoms Industry Off the Back of Its Strategic Move into the Fintech Space.” MTN Group Management Services (Pty) Ltd. April 26, 2022.

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