4G networks in Africa double in number, but adoption remains limited

The number of 4G-LTE mobile networks in Africa has doubled over the last 18 months, with coverage now reaching one in five people. Since the beginning of 2015, mobile operators have launched 34 new networks, extending 4G services to 14 more countries, including some of the world’s lowest GDP markets such as Malawi, Burundi and Liberia. However, despite 4G now extending to more than half of the countries on the continent, 4G adoption in Africa still lags the rest of the world by some distance, and the competitive nature of many markets presents a significant challenge to operators looking to make a return on investment in a wide-scale 4G network.

Figure 1: 4G adoption versus 4G network coverage by population, Q2 2016

Source: GSMA Intelligence

The 4G gap between Africa and the rest of the world is set to widen by 2020

We expect all regions except Africa to exceed 75% 4G coverage in terms of population by 2020, with average adoption (as a percentage of total connections) surpassing 42%. In Africa, 4G coverage will reach 32% by 2020, although adoption will still be below 10%. This substantial difference in 4G adoption between Africa and the rest of the world reflects the prevalence of high-frequency ‘capacity band’ spectrum above 1GHz in 4G deployments, and the specialist business models adopted by some operators.

In Africa, two-thirds of the live 4G networks for which the spectrum allocated is known operate on higher frequency ‘capacity’ spectrum bands (above 1GHz) only. These have limited propagation, so such networks are typically confined to densely populated urban areas. However, Africa’s urban population is still low compared to other regions, making it difficult for mobile operators to increase coverage. Only 16% of the networks use spectrum at frequencies below 1GHz, and 18% use a combination of both. Meanwhile, nine of the 65 4G mobile networks in the region are operated by niche players providing 4G service only, mainly targeting business communities and data-only device users residing in the capital cities. We do not expect such players to extend their coverage outside of other major cities.

Network sharing and partnerships are driving 4G coverage in some countries

There are a few encouraging examples of markets where we expect 4G coverage to significantly exceed the regional average. In Tunisia, all three operators launched LTE-Advanced services at the end of Q1 2016. We expect them to quickly expand coverage due to the allocation of both sub-1GHz and capacity spectrum bands, and a network-sharing agreement between two of the three players. Meanwhile, in Rwanda, the government has formed a joint venture with KT Corporation to launch its open-access 4G network and provide 4G services to local mobile operators and ISPs on a wholesale basis. With this collaboration, we forecast LTE coverage in the country to reach 75% by 2020.

Although the economics of providing high-speed mobile broadband services remain challenging across large parts of Africa, the allocation of further spectrum in the sub-1GHz band, along with partnerships and network-sharing agreements, can drive down rollout and maintenance costs, improve coverage and service quality, and reduce Africa’s 4G gap.