Two thirds of Africans yet to join the mobile revolution
African mobile penetration set at 33%; multiple SIMs driving growth
Only one in three of the African population is currently subscribed to a mobile service, highlighting a major growth opportunity for regional operators that are able to extend affordable services into rural areas.
GSMA Intelligence calculates that the total number of ‘unique’ individual mobile subscribers in Africa stood at 356 million in Q4 2012, representing just 33 percent of the continent’s population. The one-in-three figure is about half of Africa’s penetration rate when calculated by connections, reflecting the fact that cost-conscious African consumers hold two SIM subscriptions each on average.
Africa’s subscriber penetration rate is the lowest in the world. A recent GSMA Intelligence study found that the total number of unique subscribers worldwide stands at 3.2 billion, accounting for 45 percent of the world's 7 billion population.
The Western Africa region contains 103 million unique subscribers in Q4 according to the study – just under half of these residing in Africa's single largest market, Nigeria. Second is the Northern Africa region (101 million), which contains large markets such as Egypt, Algeria and Morocco; followed by Eastern Africa (82 million), Southern Africa (37 million) and Middle Africa (33 million).
Total African connections are currently growing by about 15 percent a year, with year-on-year growth strongest in Middle Africa (23 percent), Eastern Africa (18 percent) and Western Africa (18 percent). However, connections growth continues to be driven largely by multiple SIM ownership.
Africans are calculated to hold 1.96 SIM cards each, on average, above the global average of 1.85. As is common in other parts of the developing world, multiple SIM ownership in Africa occurs mainly due to budget-conscious consumers accumulating prepaid SIM cards in order to access as many low-cost deals as possible.
The impact on connections growth was confirmed recently by the Ugandan regulator. The Uganda Communications Commission (UCC) explained in its 2011/12 half-year Market Performance Review that “robust subscription growth is largely premised on aggressive on-net promotions prevalent during the second half of the year.” As a result, “second SIM buyers dominated new subscriptions with marginal first time SIM acquisitions.”
In the GSMA Intelligence study, Nigeria was found to have the highest level of multiple SIM ownership in Africa, at 2.39 SIM cards per user on average – on a global basis second only to Indonesia (2.62 SIMs/user). The country’s largest mobile operator, MTN Nigeria, reported in Q2 that "only 25 percent of the gross additions in the market were first time subscribers. The other 75 percent was mainly attributable to rotational churn and multi SIM cards in the market.”
MTN says the trend is being further exacerbated by aggressive pricing competition, noting a “multitude of bonuses on [prepaid] recharge, freebies and other promotional activity”. It also highlighted the Nigerian government’s controversial decision to withdraw fuel subsidies at the beginning of the year, which MTN claims negatively affected telecoms spending.
While African operators are presented with a significant growth opportunity, new subscribers are increasingly likely to reside in rural areas, which may lead to infrastructure challenges.
A new GSMA study that looked at Kenya, Tanzania and Uganda found that 73 percent of the rural population in these three markets had mobile coverage, compared to 100 percent in urban areas. The rural population accounted for 87 percent of the total population in Uganda and 74 percent in Tanzania, explaining the low mobile penetration levels in both countries.
Extending coverage into rural areas in these markets “presents the operators with challenges due to unreliability and quality of power supply,” the study says. The three countries combined had a total network of 13,225 base station sites as of Q3 2012, of which 9,957 are connected to the commercial grid power supply and the remaining 3,268 base station sites are ‘off-grid.’ Both types are said to rely on expensive diesel generators due to either poor power infrastructure or limited grid power.
To connect new African subscribers in rural areas, operators must also overcome challenges related to high levels of poverty (classed as those who live on less than US$2 a day) as detailed in the GSMA's Mobile and Development Intelligence initiative. Other barriers to adoption include a lack of basic education skills (literacy, numeracy etc.), though the mobile industry itself is playing a role in addressing this issue via mHealth, mLearning, mAgri and other initiatives.
Joss Gillet, Senior Analyst, GSMA Intelligence:
Africa is the world's fastest-growing region both in terms of mobile connections and unique mobile subscribers, a trend that will continue over the next five years. While our study brings a new perspective on growth opportunities in the region, highlighting the gulf between connection and subscriber penetration, it does not measure the phone-sharing phenomenon that is so popular in Africa. According to a recent World Bank report, there is still a need to measure the number of persons with access to a mobile phone, notably among households where members could theoretically use the same handset, thereby extending mobile access. The report gives the example of Senegal where connections penetration stood at 57 percent in 2009 but household penetration was estimated at 87 percent, therefore dramatically extending mobile phone access - considering that on average each Senegalese household contains nine people.
Our study highlights that one third of the African population has subscribed to a mobile service and that affordability remains a key challenge for mobile operators. Monthly ARPU stands below US$5 in markets such as Burundi, Rwanda, Uganda and Egypt, while an average rural tea farmer in Tanzania earns just 11p a day. In the latter country, Vodacom noted that future growth will come from rural areas which currently have low connections penetration (25 percent in Q3 2012, compared to 80 percent in urban areas), further adding that "clearly the growth will start with voice and text messages before the rural area become matured enough to migrate to the Internet and high speed broadband banner."
Africa unique subscribers by region 1
Source: GSMA Intelligence
1 GSMA Intelligence uses the official UN geoscheme to classify global regions and subregions