Telcos at a crossroad in Sub-Saharan Africa

Telcos at a crossroad in Sub-Saharan Africa

Τhe great challenges ahead for the telecom operators in Sub-Saharan Africa and their need to search for new revenue streams are underlined in the new report of GSMA, “Global Mobile Trends 2017”. It is not the first time that we read about the regulatory environment or the massive migration of consumers to OTT services which are mentioned at the report. Regulation is a constant issue we come across in various countries of the region and on the other hand IP-based services are considered a major problem not only in Africa but globally for all telecom operators. Those, are maybe the main reasons for the fact that mobile economic growth in the region reached (in 2016) its lowest level in 20 years.

Su-Saharan Africa’s mobile economy (Global Mobile Trends 2017, GSMA)

For the time being analysts remain positive as the economic outlook for 2017 has improved and it is believed that near-term revenue growth is still healthy. But this doesn’t mean that operators can afford to be complacent. On the contrary this is the time for action and as the report says “operators need to place a greater urgency on searching for new growth streams other than subscriber growth”. The need to create value is a common problem for every telecom operator in the world and one diagram is very indicative for the challenges they face (in very different terms).

As we can see Apple, Google, Amazon, Facebook and Netflix have collectively gone up 3.5× in enterprise value (EV) terms since 2010 while on the other hand telecom operators are in about the same level they were seven years ago.

Young, the steam engine of subscriber growth

In terms of subscriber growth, analysts expect that it will come from the young population of the region. At the end of the previous year overall mobile penetration was 43%. If we compare it with other regions we will find out that Sub-Saharan Africa has the lowest penetration in the world. On average, 70% of adults above 16 years old already have a mobile subscription. GSMA expects that new growth will largely come from region’s under 16 year-olds, who account for 45% of the total population. For the time being only 10% of total mobile subscriptions come from this age group, meaning that there is a great potential there. As mobile uptake by the young becomes bigger, this also will create a chain reaction to the market and it is believed that it will drive smartphone adoption and demand for data-centric services.

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ChannelVAS is the premium developer of Mobile Value Added Services for Mobile Operators. We are an affiliate of Channel IT, Africa’s largest independent distributor of Mobile Network Infrastructure. With presence in more than 15 countries and a continuous expansion to new markets globally, ChannelVAS can cover a wide range of services, from Airtime Credit, and Mobile Financial Services to Advertising, Content and Marketing solutions.