THE MARKET FOR MOBILE PHONES IN AFRICA

Africa has meerged as one of the fastest growing markets for mobile phones in the world...

W hen it comes to mobile phones, Africa is truly undergoing a revolution. A new study shows that Africa is the first continent to have more mobile phone users than fixed-line subscribers. Mobile phones have revolutionised Africa during the last years: more Africans have begun using phones since the year 2000 than in the whole of the previous century.

The International Telecommunication Union (ITU) presented new statistics on the telecom sector in Africa at the recent Africa Telecom conference held in Cairo. According to the ITU survey, Africa has also become the world’s fastest-growing mobile phone market. Over the past five years the continent’s mobile phone use has increased at an annual rate of 65 per cent, which is twice the global average. This is good new for telecom investors in Africa.

The actual growth in mobile phones has been far larger than expected by international experts and investors. A major reason for the boom is that Africa lags far behind other continents when it comes to fixed-line phone subscribers. Only 2.8 per cent of Africans have ordinary phone services.

In the generally sparsely populated and extensive African continent, where the majority population lives in poverty, the large costs of stringing up telephone wires so far has not been economically viable. Mobile phone networks, on the other hand, are much cheaper and faster to establish. As a result, some 6 per cent of Africans now use mobile phones; more than double the number of fixed-line phone subscribers.

The establishment of mobile phone networks has also defied structures hostile to investments, warfare, failed states and natural disasters. Somalia, which has not had any central government for over a decade, has achieved a vibrant mobile industry. Mobiles have steadily advanced in Congo Kinshasa and Liberia despite heavy warfare. Instable Guinea-Bissau this year became the African nation to erect a mobile phone network.

Phone masts tower above cities such as Cape Town and Cairo, war–torn capitals such as Mogadishu and Monrovia, rural villages never touched by telephone lines and even remote refugee camps such as Kakuma in northern Kenya, where text messages and irritating ringtones are now as much a part of life as food handouts.

This remarkable growth — the African market is expanding nearly twice as fast as Asia’s — has confounded analysts and even service operators. As recently as 2003, the ITU forecast that there would be only 67 million users by the end of 2005.

Before mobile phones, vast swaths of Africa were communication voids. There are just three landlines per hundred Africans and most are expensive and unreliable. By contrast, Europe has 40 fixed phones per 100 people.

The GSM handset market in Nigeria is currently undergoing an unprecedented boom. Shipments of new GSM phones are forecast to rise almost 60 per cent in 2008 making Nigeria the largest market in Africa for GSM phone sales thereby displacing South Africa from the number one spot. It is estimated that just 25 per cent of Nigeria’s population has a mobile phone – a useful insight to gauge the Nigerian market’s enormous potential as a growing market for GSM handsets.

South Africa, on the other hand, with its booming economy, is Africa’s biggest mobile phone market as of now, with nearly 25 million subscribers. South Africa is followed by Nigeria, Egypt and Morocco.

However, it is in less-developed countries that the statistics are most startling. The Democratic Republic of Congo, population 60 million, has 10,000 fixed telephones but more than a million mobile phone subscribers. In Chad, the fifth-least developed country, mobile phone usage jumped from 10,000 to 200,000 in three years.

A lack of electricity has not proved a hindrance: roadside vendors charge mobile phones with car batteries. As the signal coverage expands, cheaper phones and calls fuel growth.

Recently Safaricom started selling what is believed to be the cheapest mobile phone. Designed by Motorola for the developing world, it costs £20, with free connection. The cheapest airtime voucher is about 40p.

In Kenya it is possible to buy talk-time and send it to the phone of a relative, who then cashes it in at local stores. Where few have access to bank accounts, airtime is currency.

Cell phones not only offer Africans new facilities through voice services but also uses emerging technologies that bring Internet access to phones, thereby bypassing the need for a computer for connecting to the World Wide Web. Since computers are rare in much of the African continent due to poor wire-line infrastructure – a recent study found 97 per cent of people in Tanzania said they could access a mobile phone, while only 28 per cent could access a landline – and unreliable electrical grids, a technology that offers Internet access without a costly PC promises to pay dividends for Africans.

The world’s leading mobile phone manufacturer Nokia is aware that emerging markets in Africa represent a huge expanding opportunity, therefore, Nokia chose Nairobi, Kenya, to announce the launching of two phones specially designed for Africa.

Nokia believes that by 2009, Africa will reach 200 million cell phone users, the total number of “mobile” people reaching by 2010 the 3 billion threshold.

Both models, Nokia 1100 and Nokia 1600, are easy to use and have an intuitive interface. While Nokia 1100 was fitted with a black and white display, Nokia 1600 was endowed with a 65,000 color display.

The devices support polyphonic ringtones, have preinstalled games and features like Speaking Clock. Both devices come in various colors.
Nokia 1100's battery offers 5 hours of operation and 380 hours of stand-by, weighs 80 grams and has a price tag of 65 Euros.

Although the prices seem relatively small, it's likely that Nokia will lower them even more as there are producers offering cell phones priced around $40-50.

Sale of mobile phones in Africa and Middle East is set to more than double in the next three years. The rise is expected to be bolstered by expansion of local and regional economies and more service providers rolling out networks across the region.

Nokia reckons the two regions will top the list of fastest growing markets in the next three to four years surpassing Asia which currently occupies the number one position.

Middle East and Africa are among the world's fastest growing telephony markets and are becoming a major focal point for mobile phone manufacturers according to the International Telecommunications Union (ITU).

Kenya has already drawn the attention of major manufacturers such as Nokia, Samsung and Motorola, with each setting up offices to drive their strategic advances in the market. Nokia recently opened a regional office in Dubai, aiming to gain better access to what is becoming the world's fastest growing telephony market and facilitate local development of new features in phone models.

Nokia's President and CEO Olli-Pekka Kallasvuo said strong growth in the Middle East and Africa region would continue with the number of mobile device volumes expected to double from the estimated over 100 million phones sold in 2006 to about 250 million by 2010.

Increased demand for mobile phones is expected to provide phone manufacturers with a steady supply of customers as existing owners upgrade their models and new subscribers come online with increased network expansion.

“We have forecasted a global market of four billion subscriptions in 2010, up from the current level of just over three billion. And we expect that nearly a quarter of new subscriptions will come from the Middle East and Africa region,” Kallasvuo said. “The Middle East and Africa are critical markets for Nokia, and we expect strong economic growth to continue. We plan to strengthen our operations by reaching further into rural communities to bring mobile communications to more people.”

Nokia’s mobile device volume in the Middle East and Africa region increased nearly 37 per cent year-over-year in the second quarter, maintaining its lead over competitors Samsung and Motorola.

However, Kallasvuo said the anticipated growth would not necessitate the establishment of a factory in the region, saying the existing manufacturing network was capable of meeting the demand of the growing African market.

Part of the company’s strategy for the African region has been to produce affordable devices with specialised adaptations for local consumers, many of who are first time users of the mobile phone.

Nokia said the inclusion of a flashlight, FM radio and Swahili language options have pushed sales of entry-level or lower-end models not only in Kenya but also in Tanzania and Uganda. Mobile firms have consistently pushed sales of entry-level phones as they roll out their networks across the country.

Celtel has also recently announced the launch of a lifetime rewards scheme that entitles customers to extra airtime every month if they buy entry-level models such as Nokia’s 1110i or Motorola’s C118 in a bid to improve sales of these mobile phones in the East African markets.

Looking at the great demand for mobile phones in Africa and the rising sales figures throughout the African continent, an enterprising organisation in Zambia called M-Tech Mobile Communicartion has started assembling its own brand of mobile telephone handsets and has been promoting its brand throughout Africa.

"We believe in bringing technology closer to the African people by providing world class products ar competitive prices," says Mohaammed Seedat, managing director of Zambia-based M-Tech Mobile Communication. "The business potential of our venure is enormous as we will be meeting the rising demand for mobile handsets throughout Africa in the coming years," he says. (watch video report):