Α possible 4G customer base for the years to come

Α possible 4G customer base for the years to come

Africa is a region with sharp contrasts. There is a significant percentage of people who live in urban areas and have access to services and utilities that are common to developed countries and at the same time a vast majority of people in rural areas lack access to basic things, such as energy, water, education or health.

This divide is also common in African mobile industry, where we can see a strong phenomenon of polarization. While smartphone ownership dominates the urban markets, feature phones still contribute to the largest proportion of ownership in the rural markets.

At the recent report of Deloitte, Game of Phones, we can take a glimpse about this diversity between five African countries.

 

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This diversity is considered to be driven by the large income disparity and as a result, by the difference at the cost of owning a mobile phone. According to a recent ITU report, Measuring the Information Society Report 2016, Africa remains the most expensive region in the world in terms of monthly cost of operating a mobile phone as a percentage of gross national income per capita. This report measures the cost of mobile broadband services, which in most cases is the immediate result of the acquisition of smartphones.

“Africa is the only region in which the average price of handset-based mobile-broadband plans represents more than 5 per cent of GNI p.c. This underlines that the service remains unaffordable for several segments of the population in many African countries, although there has been a large reduction in prices in terms of GNI p.c. in 2015.”

Having all these in mind, recent findings of Counterpoint Research are not surprising. According to this new report, more than 400 million feature phones were sold globally in 2016 and analysts predict that an additional half a billion will be shipped globally over the course of five years. One major detail is that this latter number refers to 4G feature phones. This, according to Counterpoint, is making a case for the rise of 4G capable feature phones with the core value proposition being VoLTE calls and move the users to the cost efficient 4G networks (more than 1.3 billion feature phone users are out there mostly from emerging markets of Asia and Africa).

An opportunity for telcos

All the above create a significant opportunity for the mobile industry, who in some cases could subsidize the transition and create new business models in order to capitalize it and exploit full potential of it. Of course we refer to a market with thin margins but the strength comes in numbers (more than 1 billion feature phone users). In the process, the transition to a 4G feature phone could be the first step of a complete transition to 4G experience (smartphones, data plans etc.), creating a new “premium” customer base for the years to come.

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