JOHANNESBURG, South Africa-Various African countries have begun the task of liberalizing their telecommunications markets with the various governments seeking to court offers from foreign strategic equity partners.
However, for the telecoms step of the African renaissance to move forward, analysts believe that more will be needed in the form of opening and regulating markets. The recent downturns in the telecommunications markets in the United States and Europe, in particular Europe’s third-generation (3G) license spending sprees, have probably strained the finances of most would-be equity partners.
The upcoming International Telecommunication Union (ITU) event, Telecom Africa 2001, to be held near Johannesburg in November will focus on the enormous amount of work still to be done to bring Africa up to the levels of the industrialized world. The current track record of telecommunications across the continent is not healthy. During 2000, it is estimated that Africa had only one in 60 of the world’s mobile subscribers, one in 50 of the world’s fixed-line subscribers and only 1 percent of the world’s Internet use.
Nonetheless, there is a glimmer of hope in the fact that African countries have begun a slow and steady move toward embracing liberalization of their telecommunications markets coupled with the fact that mobile cellular subscribers now far outnumber fixed-line subscribers, while Internet use is reported to be on the increase. These factors together with advances in technology could allow the continent to at least catch up, if not leap frog, the rest of the world in terms of communications development.
Prepaid spurs growth
According to Dobek Pater, principal analyst at research firm BMI-TechKnowledge based in Johannesburg, there are now an estimated 10.1 million cellular subscribers in Africa, with that figure expected to increase to roughly 16.6 million by the end of 2001.
“This represents a growth of around 54 percent, with most of the subscribers being prepaid. The future for the growth in absolute numbers is expected to increase, while the percentages are expected to be lower as the markets become more mature,” Pater said.
The impetus behind this growth has been the uptake in prepaid services across the continent. Since launching services in August, network operator MTN in Nigeria has managed to gain an estimated 40,000 subscribers, while rival operator Econet Wireless has between one-third and one-half the market with about 15,000 to 20,000 subscribers. MTN said it is well on its way to achieving the goal of garnering more than 50 percent of the Nigerian mobile subscriber market. Econet Wireless has reportedly sought a different route than MTN, targeting corporate subscribers and offering a postpaid service.
MTN recently increased its coverage by installing additional base stations and radio sites to bring its total in Nigeria to 90 and 30 respectively. MTN expects to invest US$1.4 billion during the next 10 years in the country to cover license obligations.
On the eastern side of the continent in Tanzania, Vodacom has managed to gain an estimated 120,000 subscribers and hopes to complete its second year of operation with 250,000 users. Vodacom maintained it has managed to gain such a high penetration due to its US$142 million investment made at the launch. The rival networks of Mobitel, Tritel and Zantel appear to be lagging far behind with a combined subscriber base estimated at 126,000.
In other parts of the continent, such as the Democratic Republic of the Congo (DRC), operators are playing the waiting game as peace initiatives stall.
Pater added, “There is a pent-up demand for service in this region; MSI, the Dutch-based company, managed to gain an estimated 5,000 subscribers in the first week of service in the Copper Belt (Shaba Province) of the DRC.”
The need to service the African population is great, but a climate more conducive to long-term economic growth is necessary for this wireless revolution to penetrate deeper into the continent.
