JOHANNESBURG/FREETOWN (Reuters) – While mobile phone usage has exploded across Africa over the last decade, transforming daily life and commerce for millions, it’s a revolution that has left behind perhaps two thirds of its people.
Poor or no reception outside the towns helps explain why the continent’s mobile penetration, in terms of the percentage of the population using the service, is far lower than previously thought, and the cost of providing that service to impoverished, sparsely populated areas remains prohibitive.
In rural Sierra Leone, a country where GDP per capita is less than $ 400 a year, money doesn’t grow on trees, but mobile reception can, says street trader Abass Bangura in Freetown, the West African country’s capital.
In parts of Tonkolili, a district in the center of the country, or Kailahun to the east, it’s the only way you can get reception, he said.
“You climb stick, like mango tree, before you have network,” he said.
In South Sudan, the world’s newest state, it’s a similar story. Less than a year old, the country already has five mobile operators, and its capital, Juba, is teeming with giant billboards advertising mobile phones, but go just a few kilometers beyond a handful of fast-growing towns, and cell phones become useless.
Multiple SIM cards help users navigate patchy network coverage and take advantage of price promotions from rival operators.
That is typical of much of the continent.
With a population of just over a billion people, Africa has over 700 million SIM cards, but with most users owning at least two cards, penetration is only about 33 percent, according to a study released in November by industry research firm Wireless Intelligence.
“If we look at the fact that the rural population of Africa is about 60-70 percent of the population, and if we look at the degree of penetration into the rural market, it’s very, very low,” said Spiwe Chireka of advisory firm IDC.
In Nigeria, Africa’s most populous country, there are more than enough SIM cards for everyone, but penetration is only 61 percent, according to a 2012 study by research firm Informa.
The average mobile phone user in Nigeria owns an average of 2.39 SIM cards. Globally, only Indonesia is higher, with an average of 2.62 SIM cards per user.
Even in Africa’s biggest economy, South Africa, SIM numbers comfortably exceed the population, but given the number of people using multiple devices, actual population penetration is closer to 80 percent, says market leader Vodacom.
“You’ve got a lot of people buying SIMs, but maybe not enough phones to put it in,” said Olayemi Jinadu, an executive with the Sierra Leone arm of Indian telco Bharti Airtel.
COST VERSUS BENEFIT
The unserved rural millions could represent another growth opportunity for Africa-focused telcos like South Africa’s MTN Group, Bharti Airtel and Kuwait’s Zain, but first they have to figure out a cost-effective way to push into sub-Saharan Africa’s remote corners.
“There’s great potential, but the big concern for us is operational costs,” said Andre Claasson, chief operating officer at Zain South Sudan.
In rural Africa, the cost of running a network tower often exceeds the revenue it reaps. Fuel is typically about 40 percent of a tower’s operating cost, and in remote areas companies burn more diesel by bringing fuel to towers than is used powering them.
Although roughly 73 percent of Africa’s land has cell phone coverage, according to market research firm IDC, that still leaves vast tracts of rural Africa without network access.
Africa has 170,000 mobile towers now and needs another 60,000, according to tower company IHS Group, which at an average $ 200,000 each means an outlay of $ 12 billion.
“If you are an operator asked to spend $ 200,000 to build a site and another $ 2,000 a month to run it in an area with 500 people herding cows, it doesn’t make sense,” said Issam Darwish, IHS’s chief executive.
Average revenue per user is also low. It can vary between $ 1 and $ 10 per month, much lower than in developed markets such as the United States, which delivered ARPU of $ 51 in 2012 or Britain, $ 27.
Bharti, sub-Saharan Africa’s third-largest telecom group, says it makes $ 6.40 per user in Africa, which is higher than its home Indian market, where it makes only $ 3.30 a month, but the cost of operating in Africa is much higher and there isn’t a comparable middle class ready and able to spend more.
“You either have a handful of people in the affluent part of the society or you have lots of people who can’t afford the services,” its Chairman Sunil Mittal said last year.
Operators can save money by sharing towers, but even then, some sites will never make sense without government subsidies, analysts say.
African expansion has not been cheap for telcos. Over the past five years, mobile operators have spent a combined $ 16.5 billion on capital expenditure in the key markets of South Africa, Nigeria, Kenya, Senegal and Ghana, according to Wireless Intelligence.
Bharti has earmarked $ 1.5 billion for capex this year, while fourth-placed France Telecom is spending $ 9.3 billion between 2010 and 2015.
Spare cash is increasingly rare for debt-strapped European telecoms operators, which are cutting their dividends to cope with falling revenues and network upgrade costs in their home markets.
Some African regulators have set up funds to promote coverage, to which operators are expected to contribute.
In Sierra Leone, the Universal Access Development Fund (UADF) is yet to subsidize the cost of putting up a single mast, though it has been active for several years. The regulator complains networks do not contribute the fees they should.
“If we can’t subsidize, they’ll never erect towers there,” said Bashir Kamara, Project Manager at UADF.
($ 1 = 0.6350 British pounds)
(Additional reporting by Hereward Holland in Juba and Chijioke Ohuocha in Lagos; Editing by David Dolan and Will Waterman)
Tech News Headlines – Yahoo! News
Title Post: Telecoms boom leaves rural Africa behind
Url Post: http://www.news.fluser.com/telecoms-boom-leaves-rural-africa-behind/
Link To Post : Telecoms boom leaves rural Africa behind
Rating:
100%
based on 99998 ratings.
5 user reviews.
Author:
Thanks for visiting the blog, If any criticism and suggestions please leave a comment
Telecoms boom leaves rural Africa behind
This article
Telecoms boom leaves rural Africa behind
can be opened in url
http://newsapprobative.blogspot.com/2013/01/telecoms-boom-leaves-rural-africa-behind.html
Telecoms boom leaves rural Africa behind
