Mobile makers eye bonanza in Africa

Feb 27, 2013 by Emmanuelle Trecolle
A man with a phone in hand walks past a window branded in an 'Airtel' logo in the Kenyan capital Nairobi on May 20, 2011. Africa's mobile phone market, the fastest-growing in the world, is the last frontier for the industry with the promise of unlocked riches luring global interest including from Chinese handset makers.

Africa's mobile phone market, the fastest-growing in the world, is the last frontier for the industry with the promise of unlocked riches luring global interest including from Chinese handset makers.

But there are two significant challenges in Africa, according to industry leaders and analysts at the world's biggest mobile fair in Barcelona, Spain: lowering prices for handsets and services and boosting a patchy network.

The use of mobiles is exploding among the one billion people in Africa, where landline networks are poorly developed. Many people rely on the devices for financial transactions—Africa is a leader in the use of ""—or to link to the Internet.

"Africa is the last frontier of in the world," said Manoj Kohli, chief executive of Indian group Bharti Airtel, which has a big presence in the continent.

"But it is tough to maintain a network," he added.

According to global consultants PwC, the number of mobile telephone subscriptions in Africa exploded from 16 million in 2000 to 246 million in 2008 and more than 500 million now.

It expects there to be 600 million subscribers by 2016.

Many Africans have two SIM cards to profit from cheaper calls on each network, however, and industry analyst Wireless Intelligence estimates only a little over one third of the population actually had a mobile telephone in the second quarter of 2012.

Average revenue per consumer in Burundi, Rwanda or Egypt was about $5 (3.80 euros) a month, it said.

Price is a challenge for handset manufacturers, too.

Chinese manufacturer Huawei this month launched a sleek new smartphone adapted for Africa, the 4Afrika, running on Microsoft's operating system and with a four-inch screen.

Adapted for each market, the Nigerian version has a dictionary for the local Yoruba language and local news, along with an application related to the popular low-budget movie industry, called Nollywood.

It is expected to sell for less than $200, a Microsoft executive said, with the first devices being offered as early as this month in Angola, Egypt, Ivory Coast, Kenya, Morocco, Nigeria and South Africa.

According to PwC, total investment in fixed and networks in Africa should rise from $78.8 billion in 2008 to $145.9 billion by 2015.

Extending coverage to rural areas means bridging long distances but also requires energy, and the electrical grid is often unreliable or non existent, industry players said. Operators often resort to costly solutions such as solar panels or diesel generators.

Sifiso Dabengwa, chief executive of South African operator MTN, the leader on the continent, said the challenge was to provide a network from one end of the the chain to the other.

Fierce competition for African customers was hurting profits, he added.

"Five or six operators in a country makes it a difficult market for us," he said, accusing some players of charging at below cost and urging consolidation in the sector.

Some operators, including Barthi Airtel's Kohli, called for players to share infrastructure so as to ensure coverage of the continent and to have any chance of offering Africans third generation fast networks, let alone the superfast fourth-generation.

"We cannot duplicate networks. Only Americans and Europeans can do that, not Africans," he warned.

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