By Ibrahim Akinci, Suraj Moraje, and Nieves Ortega
After years of scorching growth, Africa has half a billion mobile telephone subscribers. Last year, however, even as prices dropped 15-20%, growth slowed to 17%, a sharp falloff from the dizzy 40% seen during the early 2000s. Indeed, call prices in Africa have fallen by 12% a year for the past five years. The average rate per minute (ARPM) for mobile voice calls across Africa is now 11 US cents, broadly in line with high-growth regions like South America and the Middle East (although still significantly higher than in China, India and Thailand).
Are the good old days already over?
Globalizing under pressure
Several factors are placing pressure on the industry.
Five years ago, African telecoms was dominated by regional corporations. That has changed as international operators began to look to the continent, a trend that continued in 2010 with the arrival of two new entrants, from India and Russia.
Today, nine companies control nearly 80% of the African market; four of the top six are international operators. The technical know-how of these operators when it comes to such skills as capital expenditure management, distribution development, and product/service platforms, combined with its go-to-market sophistication have taken competition to the next level.
At the same time, regulatory pressures are increasing across markets, as authorities become better at managing competitive forces. Last year, regulators in at least six African markets intervened to lower mobile termination rates (the prices operators charge each other for calls to their networks from elsewhere) by 20% or more, sparking a fresh round of price competition.
And the number of players has increased by a third since 2006, with most markets having three or more operators.