Mobile services

Will Africa's Data Boom Pay Off?

Africa has clearly been one of the big success stories of the mobile revolution. Bringing communications and other services to many consumers for the first time ever, mobile technologies have not only had a dramatic impact on regional productivity but also bolstered the earnings of the continent's telcos.

But the days of skyrocketing subscriber growth have drawn to a close in many countries, as discussed in a new feature-length special report from Light Reading. And while usage of traditional voice services continues to rise, prices are falling under pressure from competition and regulation. Because most Africans are still on prepaid deals, and pay for services on a per-minute basis, spending is being squeezed. (See Africa's Data Dilemma.)

Like telcos in other parts of the world, African operators have turned to data services to spur growth. But the availability of low-cost data bundles has opened up a considerable arbitrage opportunity for savvy smartphone users. By taking advantage of web telephony applications from the likes of Viber and WhatsApp, customers have been able to cut their spending on voice communications. It is little surprise to hear some operators express doubts about partnership opportunities with web players, including Facebook's widely publicized Internet.org initiative.

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Despite these difficulties, there are still positive signs. France's Orange (NYSE: FTE), for instance, has continued to prosper by focusing on markets in West and Central Africa where there is lots of growth potential. By sharing resources between countries and investing in all-IP technologies, Orange could develop a "pan-net" capability in this region -- akin to what Deutsche Telekom AG (NYSE: DT) is doing in Central and Eastern Europe. If it can reduce costs and develop the kind of service agility commonly associated with web players, its outlook could brighten even more.

"The fundamental question now at the heart of the African business model is whether the data boom will ultimately translate into higher overall revenue and margin growth for mobile operators," said Guy Zibi, chief analyst at Xalam Analytics, Heavy Reading 's Africa and Middle East research unit, in a recent study. If that question is to have a positive answer, service providers may need to change beyond recognition.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

nasimson 12/9/2015 | 8:54:59 AM
Continent of Opportunities Africa is a continent of opportunities. Not all Telecom's will be able to unearth these opportunities. Egyptian and Indian Telecoms are better suited to take advantage of these opportunities which span areas as diverse as solar, payments, internet etc.
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