STL Partners

Telco 2.0 Growth & Innovation

African Communications - a brewing storm

The outlook for the African Communications Industry is uncertain, at best. For sure, there is currently massive infrastructure investment across the continent. And this investment not only covers mobile technology, there are also major fibre and satellite projects working towards bringing the internet to the population. But a storm is brewing: major African players, such as MTN and Zain, are reassessing their corporate strategies; in-country consolidation in mobile looks inevitable in several countries as too many players have been licensed; and the business case for mass market internet services is unproven.

However, the lesson learnt from the mobile expansion through the continent is that innovation will flourish. This innovation is not only seen in products such as M-PESA, but also in business models. Africans are innovating their own business models for their own environment as well as adapting the tried and trusted business models which work in Western Europe. This article discusses some of the structural problems in some markets, examines some of major players and explores the new projects.

One Continent, Many Countries

 

Africa is a huge continent with a population close to 1bn and over 50 countries. Populations vary from Nigeria at 148m to Equatorial Guinea at 0.5m. GDP/head varies from the oil-fuelled Libya at US$8,300 to the war-ravaged Liberia at US$130. Importantly for Telco’s each country has a different regulatory framework, taxation regime and competitive intensity.

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It is hardly surprising, given all this diversity, that a wide range of strategies have been deployed by Telcos. There are a lot of nationally based local operators, however, a few key operators have been building a pan-African strategy.

The rest of this article covers:

  • The positions and strategies of Zain, MTN, and Vodafone in Africa
  • The impacts and opportunities arising from new satellites and subsea cables

It can be read by members of the Telco 2.0 Executive Briefing service here. Non-members can subscribe here.