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Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Research Forecast Report

Sub-Saharan Africa telecoms market: trends and


forecasts 20132018
July 2014
Mpho Moyo, William Hare and Alexandra Rehak

Analysys Mason Limited 2014

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

About this report


This report provides:

Figure 1: Summary of report coverage [Source: Analysys Mason, 2014]

a 5-year forecast of more than 90 mobile and fixed


telecoms KPIs for the Sub-Saharan Africa region as a
whole and for 7 key countries
an in-depth analysis of the trends, drivers and
forecast assumptions for each type of mobile and fixed
service, and for key countries

a summary of results, key implications and


recommendations for mobile and fixed operators.

Regions modelled:

Connections

Revenue

Sub-Saharan Africa

Mobile

Mobile

Handset, mobile
broadband1, M2M2

Service3, retail

Prepaid, contract
2G, 3G, 4G

Handset, mobile
broadband1, M2M2

Kenya
Nigeria

Smartphone,
non-smartphone

Handset voice,
messaging, data

South Africa

Fixed

Fixed

Sudan

Voice, broadband,
IPTV, dial-up

Service3, retail

Uganda

Narrowband voice,
VoBB
DSL, FTTH/B,
cable, BFWA

We base our forecasts on robust historical data and current


market information, unique in-house modelling tools, and a
rigorous methodology (reconciliation of different sources,
standard definitions, top-down and bottom-up modelling).

Prepaid, contract

Ghana

Tanzania

Our forecasts are informed by on-the-ground regional market


experts from our topic-led Research programmes and
Consulting division, as well as external interviews.

Analysys Mason Limited 2014

Major KPIs

Countries modelled
individually

an overview of operator strategies and country-specific


topics, with major trends, similarities and differences
highlighted through cross-country comparison

For the complete data set and our data series definitions, see
the accompanying Excel file at
www.analysysmason.com/SSA-forecast-Jul2014.

Geographical
coverage

Voice, broadband,
IPTV, dial-up, BNS
DSL, FTTH/B,
cable, BFWA
ARPU

Voice traffic

Mobile:

Fixed and mobile

SIMs, handset

Outgoing minutes,
MoU

Prepaid, contract
Handset voice, data

Includes USB modem, and mid- and large-screen, but not handset-based data.

M2M connections and revenue figures include mobile services only.

Service revenue is the sum of retail and wholesale revenue.

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Contents [1]
Slide no.

Slide no.

8.

Executive summary

9.

Growing demand for mobile voice and data, and growing smartphone
penetration offer significant opportunities in Sub-Saharan Africa

23. Mobile ARPU: Decline will slow in most SSA markets, thanks to almost
10% annual growth in handset data ARPU

10. Handset data and mobile voice revenue will contribute 90% of SSAs
retail revenue growth in 20132018, each growing by USD7.4 billion
11. South Africa is the largest telecoms market in SSA, accounting for 27%
of the regions telecoms retail revenue in 2018
12. Forecast revision: Our SSA revenue forecast revisions reflect lower
mobile voice revenue and higher demand for handset data services
13. Key trends, drivers and assumptions for the mobile market
14. Key trends, drivers and assumptions for the fixed market
15. Key implications and recommendations
16. Regional forecasts and cross-country comparison
17. Geographical coverage: We model the seven largest markets, which will
account for 62% of total SSA telecoms service revenue in 2018
18. Market context: The two most-populated countries Nigeria and South
Africa generated 51% of the regions telecoms retail revenue in 2013
19. Fixed and mobile penetration: Mobile handset growth and fixed
broadband growth will be solid in SSA, while fixed voice penetration will
decline

24. Fixed services: Africas small fixed broadband market will increasingly
lag behind the non-handset mobile broadband market

25. Fixed broadband: Household fixed broadband penetration in SSA varies


significantly by country, and South Africa is well ahead of the others
26. Revenue and ARPU: Mobile voice and handset data will drive revenue
growth through 2018, while mobile data will help maintain mobile ARPU
27. Service revenue: South Africas share will decline slightly, reflecting the
relative maturity of its market
28. Revenue mix: Mobile revenue will continue to dominate the revenue
mix, and only South Africa will have a significant level of fixed revenue
29. Individual country forecasts

30. Ghana: Service revenue will reach GHS3.6 billion (USD1.9 billion) in
2018, driven by handset data, while traditional services remain flat
31. Ghana: Key trends, drivers and assumptions
32. Ghana mobile: Fines imposed by the regulator for poor service quality
are likely to drive increased operator investment
33. Ghana fixed: The fixed market is well behind the mobile market, but
fixed broadband growth will be steady, driven by BFWA

20. Mobile penetration: SIM penetration growth will continue in the seven
major markets as affordability and coverage increase

34. Kenya: Service revenue will reach KES205.4 billion (USD2.5 billon) in
2018, driven by handset and non-handset mobile broadband

21. Mobile connections: 2G will remain the predominant technology in SSA,


while LTE will account for only 3% of mobile connections in 2018

35. Kenya: Key trends, drivers and assumptions

22. Smartphones and LTE: Smartphones will account for 26% of handsets
in SSA by 2018, as device prices decline and users upgrade
Analysys Mason Limited 2014

36. Kenya mobile: Kenya is the leading country in Africa in terms of mobile
money services, which have driven mobile data growth

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Contents [2]
Slide no.

Slide no.

37. Kenya fixed: We forecast slow but steady growth in fixed broadband,
driven by innovative alternative providers like Zuku

51. Tanzania: Key trends, drivers and assumptions

38. Nigeria: Service revenue will reach NGN2.1 trillion (USD13.1 billion) in
2018 because of handset data growth

52. Tanzania mobile: MTR cuts will put mobile ARPU under pressure;
growth in handset data ARPU will offset the decline in voice ARPU

39. Nigeria: Key trends, drivers and assumptions

53. Tanzania fixed: Government investment in a national broadband


network is expected to stimulate growth of fixed broadband

40. Nigeria mobile: Nigeria is the largest mobile market in SSA in terms of
subscriber numbers, but not revenue

54. Uganda: Mobile handset data and fixed broadband will drive service
revenue to UGX3.8 trillion (USD1.6 billion) by 2018

41. Nigeria fixed: The fixed broadband market is underdeveloped because


no operator has reached scale

55. Uganda: Key trends, drivers and assumptions

42. South Africa: Telecoms service revenue will reach ZAR137.7 billion
(USD16.9 billion) in 2018, driven by solid growth in handset data
43. South Africa: Key trends, drivers and assumptions

56. Uganda mobile: Competition is set to intensify as operators


consolidate
57. Uganda fixed: Mobile services are preferable to fixed because they
offer wider coverage at a lower cost

44. South Africa mobile: South Africa has the highest smartphone
penetration in SSA

58. About the authors and Analysys Mason

45. South Africa fixed: The planned national broadband plan and merger
between Neotel and Vodacom will stimulate the market

60. About Analysys Mason

46. Sudan: Telecoms revenue will reach SDG7.1 billion (USD2.1 billion), as
mobile data grows but mobile voice remains predominant

62. Consulting from Analysys Mason

47. Sudan: Key trends, drivers and assumptions


48. Sudan mobile: Negative macroeconomic conditions in Sudan may
threaten future growth of the mobile market

49. Sudan fixed: The fixed broadband market lacks competition and Canar
Telecom is planning to exit the market
50. Tanzania: Service revenue will reach TZS3.4 trillion (USD2.1 billion) in
2018, predominantly driven by mobile voice services

Analysys Mason Limited 2014

59. About the authors


61. Research from Analysys Mason

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

List of figures [1]


Figure 1:

Summary of report coverage

Figure 2:

Telecoms retail revenue by service type and total service revenue


(retail and wholesale), Sub-Saharan Africa, 20092018

Figure 3:

Telecoms retail revenue growth by service type, Sub-Saharan


Africa, 20132018

Figure 4: CAGRs for fixed and mobile retail revenue (20132018) and
market size by total retail revenue (2018), by country, SubSaharan Africa

Figure 14: Smartphones as a percentage of handsets, and LTEs share of


total connections (excluding M2M), Sub-Saharan Africa, 2013 and
2018
Figure 15: Mobile ARPU by country, Sub-Saharan Africa, 20092018
Figure 16: Fixed broadband connections by type, and fixed voice, IPTV and
mobile broadband connections, Sub-Saharan Africa, 20092018
Figure 17: Fixed broadband penetration of households by country,
Sub-Saharan Africa, 20092018

Figure 5: Telecoms retail revenue by service type and total service


revenue, previous and new forecasts, Sub-Saharan Africa, 2013
and 2018

Figure 18: Telecoms retail revenue by service type, fixed voice and fixed
broadband ASPU, and mobile ARPU, Sub-Saharan Africa, 2009
2018

Figure 6: Summary of key drivers and assumptions for the mobile market,
Sub-Saharan Africa

Figure 19: Telecoms retail revenue by service type, total service revenue
and growth rates, Sub-Saharan Africa, 20132018

Figure 7: Summary of key drivers and assumptions for the fixed market,
Sub-Saharan Africa

Figure 20: Telecoms service revenue by country, Sub-Saharan Africa, 2013

Figure 8: Mobile connections by technology generation and fixed


broadband household penetration, by country, 2018

Figure 22: Telecoms retail revenue by service type, and total service
revenue (retail and wholesale), by country, Sub-Saharan Africa,
2013 and 2018

Figure 9: Metrics for Sub-Saharan Africa and the seven SSA countries
modelled individually, 2013

Figure 21: Telecoms service revenue by country, Sub-Saharan Africa, 2018

Figure 10: Penetration rate by service type, Sub-Saharan Africa, 20092018

Figure 23: Telecoms retail revenue by service type and total service revenue
(retail and wholesale), Ghana, 20092018

Figure 11: Connections by service type, and growth rates, Sub-Saharan


Africa, 20132018

Figure 24: Telecoms retail revenue by service type, total service revenue
and growth rates, Ghana, 20132018

Figure 12: Active mobile SIM penetration by country (excluding M2M),


Sub-Saharan Africa, 20092018

Figure 25: Connections by type, and growth rates, Ghana, 20132018

Figure 13: Mobile connections by technology generation (excluding M2M),


and 3G and 4Gs share of connections, Sub-Saharan Africa,
20092018

Figure 27: Mobile, smartphone and 4G penetration rates, Ghana, 20092018

Analysys Mason Limited 2014

Figure 26: Summary of key forecast drivers and assumptions, Ghana

Figure 28: ARPU rates by type, Ghana, 20092018

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

List of figures [2]


Figure 29: Fixed penetration rates by service type, Ghana, 20092018
Figure 30: Fixed ASPU rates by service type, Ghana, 20092018

Figure 48: Telecoms retail revenue by service type, total service revenue
and growth rates, South Africa, 20132018

Figure 31: Telecoms retail revenue by service type and total service revenue
(retail and wholesale), Kenya, 20092018

Figure 49: Connections by type, and growth rates, South Africa, 20132018

Figure 32: Telecoms retail revenue by service type, total service revenue
and growth rates, Kenya, 20132018

Figure 51: Mobile, smartphone and 4G penetration rates, South Africa,


20092018

Figure 33: Connections by type, and growth rates, Kenya, 20132018

Figure 52: ARPU rates by type, South Africa, 20092018

Figure 34: Summary of key drivers and assumptions, Kenya

Figure 53: Fixed penetration rates by service type, South Africa, 20092018

Figure 35: Mobile, smartphone and 4G penetration rates, Kenya, 20092018

Figure 54: Fixed ASPU rates by service type, South Africa, 20092018

Figure 36: ARPU rates by type, Kenya, 20092018

Figure 55: Telecoms retail revenue by service type and total service revenue
(retail and wholesale), Sudan, 20092018

Figure 37: Fixed penetration rates by service type, Kenya, 20092018


Figure 38: Fixed ASPU rates by service type, Kenya, 20092018
Figure 39: Telecoms retail revenue by service type and total service revenue
(retail and wholesale), Nigeria, 20092018

Figure 50: Summary of key drivers and assumptions, South Africa

Figure 56: Telecoms retail revenue by service type, total service revenue
and growth rates, Sudan, 20132018
Figure 57: Connections by type, and growth rates, Sudan, 20132018

Figure 40: Telecoms retail revenue by service type, total service revenue
and growth rates, Nigeria, 20132018

Figure 58: Summary of key drivers and assumptions, Sudan

Figure 41: Connections by type, and growth rates, Nigeria, 20132018

Figure 60: ARPU rates by type, Sudan, 20092018

Figure 42: Summary of key drivers and assumptions, Nigeria

Figure 61: Fixed penetration rates by service type, Sudan, 20092018

Figure 43: Mobile, smartphone and 4G penetration rates, Nigeria, 2009


2018

Figure 62: Fixed ASPU rates by service type, Sudan, 20092018

Figure 44: ARPU rates by type, Nigeria, 20092018


Figure 45: Fixed penetration rates by service type, Nigeria, 20092018
Figure 46: Fixed ASPU rates by service type, Nigeria, 20092018
Figure 47: Telecoms retail revenue by service type and total service revenue
(retail and wholesale), South Africa, 20092018

Analysys Mason Limited 2014

Figure 59: Mobile, smartphone and 4G penetration rates, Sudan, 20092018

Figure 63: Telecoms retail revenue by service type and total service revenue
(retail and wholesale), Tanzania, 20092018
Figure 64: Telecoms retail revenue by service type, total service revenue
and growth rates, Tanzania, 20132018
Figure 65: Connections by type, and growth rates, Tanzania, 20132018

Figure 66: Summary of key drivers and assumptions, Tanzania

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

List of figures [3]


Figure 67: Mobile, smartphone and 4G penetration rates, Tanzania, 2009
2018
Figure 68: ARPU rates by type, Tanzania, 20092018
Figure 69: Fixed penetration rates by service type, Tanzania, 20092018
Figure 70: Fixed ASPU rates by service type, Tanzania, 20092018
Figure 71: Telecoms retail revenue by service type and total service revenue
(retail and wholesale), Uganda, 20092018
Figure 72: Telecoms retail revenue by service type, total service revenue
and growth rates, Uganda, 20132018
Figure 73: Connections by type, and growth rates, Uganda, 20132018
Figure 74: Summary of key drivers and assumptions, Uganda
Figure 75: Mobile, smartphone and 4G penetration rates, Uganda, 2009
2018
Figure 76: ARPU rates by type, Uganda, 20092018
Figure 77: Fixed penetration rates by service type, Uganda, 20092018
Figure 78: Fixed ASPU rates by service type, Uganda, 20092018

Analysys Mason Limited 2014

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Executive summary
Regional forecasts and cross-country comparison
Individual country forecasts
About the authors and Analysys Mason

Analysys Mason Limited 2014

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Growing demand for mobile voice and data, and growing smartphone
penetration offer significant opportunities in Sub-Saharan Africa

Mobile voice will continue to be the largest component of


the market, as new market entrants and MTR reductions
drive price competition and increased traffic.
Analysys Mason Limited 2014

40
30
20
10

2018

2017

2016

2015

2014

2013

2012

An increase in mobile Internet users will drive growth of


mobile handset data revenue at a 19.6% CAGR; this is
largely driven by smartphones, which increase from 12%
of handsets in 2013 to 26% in 2018 (a CAGR of 25.2%).

50

2011

Under-penetration of fixed and mobile data services


represents a growth opportunity for service providers.
However, affordability and coverage are major challenges.
Significant structural and commercial barriers to will
continue to restrain fixed services growth in particular.

60

2010

Several trends will drive revenue growth in the next 5 years.

70

2009

Telecoms service revenue will grow at a 6% CAGR during


20132018 (mobile at 6.7% and fixed at 1.0%) to reach
USD65.3 billion in 2018.

Figure 2: Telecoms retail revenue by service type and total service revenue
(retail and wholesale), Sub-Saharan Africa, 20092018 [Source: Analysys
Mason, 2014]

Revenue (USD billion)

The telecoms service market in Sub-Saharan Africa (SSA)


was worth USD49 billion in 2013, of which mobile services
accounted for 86.5%. South Africa is the largest market in the
region, with telecoms service revenue of USD14.94 billion in
2013. SSA is growing faster than any other regional market,
but accounted for only 2.9% of worldwide telecoms revenue
in 2013, increasing to 3.6% by 2018.

Mobile voice
Mobile M2M
Mobile messaging
Fixed voice and narrowband
Fixed broadband and IPTV
Mobile handset data
Business network services
Mobile broadband
Service revenue (retail and wholesale)

10

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Handset data and mobile voice revenue will contribute 90% of SSAs retail
revenue growth in 20132018, each growing by USD7.4 billion

Analysys Mason Limited 2014

12
10
8
6
4
2

Total retail

Fixed voice
and narrowband

Mobile messaging

Fixed broadband
and IPTV

Mobile M2M

SSAs fixed services market is underdeveloped.


Household penetration is currently very low, at 2%.
National broadband plans and new terrestrial backbones
should help to increase coverage and reduce costs.

14

Business
network services

Fixed broadband will be a significant driver of fixed retail


revenue, reaching USD1.2 billion in 2018 (CAGR of 8.7%),
but the fixed share of overall revenue is extremely low.

16

Mobile broadband

Non-handset mobile broadband revenue will contribute a


much smaller amount, adding USD1.4 billion during 2013
2018, to reach USD2.7 billion of revenue in 2018.

18

Mobile voice

Mobile handset data revenue is growing rapidly (CAGR of


19.6%); it will add slightly more revenue than mobile voice
(just over USD7.4 billion), and will account for 19.1% of
retail revenue by 2018. Nigeria and South Africa will
account for 63.2% of handset data revenue by 2018.

20

Mobile handset data

Mobile voice revenue remains the primary contributor to


revenue in the forecast period, reaching USD35.6 billion in
2018 (CAGR of 4.7%). Growth will come from higher traffic
and connections growth, counterbalanced by lower voice
ARPU because of competition and MTR reductions.

Figure 3: Telecoms retail revenue growth by service type, Sub-Saharan


Africa, 20132018 [Source: Analysys Mason, 2014]

Revenue growth 20132018 (USD billion)

Retail telecoms revenue (excluding wholesale) in SSA will


grow by USD16.5 billion during 20132018, to reach
USD59.9 billion (a 6.7% CAGR).

11

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

South Africa is the largest telecoms market in SSA, accounting for 27% of
the regions telecoms retail revenue in 2018

All markets will show mobile revenue growth through 2018,


although Nigeria and South Africa will grow more slowly than
the regional average. Mobile handset data will be the main
driver of revenue growth, as smartphones and improved 3G
coverage and 4G roll-outs in some countries stimulate mobile
Internet demand. Potential new market entrants in Ghana,
Sudan and Uganda will further spur competition.
Mobile voice services will face increasing pressure from
regulatory changes MTR cuts, for example which usually
translate into reduced retail prices and flat on/off-net tariff
offers. Nigeria, South Africa and Tanzania are at high risk of
MTR-associated mobile voice revenue decline.
Fixed broadband revenue growth will offset the decline in
fixed voice revenue in most countries. Fixed retail revenue
will grow everywhere but Sudan, but will be relatively flat in
South Africa, Nigeria and Tanzania. Ghana, Kenya and
Uganda all show high fixed growth, from a very low base.
Analysys Mason Limited 2014

Figure 4: CAGRs for fixed and mobile retail revenue (20132018) and market
size by total retail revenue (2018), by country, Sub-Saharan Africa [Source:
Analysys Mason, 2014]

Fixed retail revenue growth (CAGR 20132018)

South Africa is the largest market in SSA (retail revenue was


USD13.9 billion in 2013 accounting for 31.8% of regional
retail revenue in 2013, and 27.1% in 2018). Nigeria is the
second-largest, growing to 20.4% of regional retail revenue in
2018. Ghana, Kenya, Sudan, Tanzania and Uganda account
for around 15% of regional revenue throughout the forecast
period. The 47 African countries not modelled individually
contributed 33.3% of retail revenue in 2013.

10%
1.6

8%
6%
2.3

1.4

4%
2%
2.0 12.2

16.2

0%
18.1

2%
0%

2%

4%

6%

8%

10%

12%

Mobile retail revenue growth (CAGR 20132018)

Ghana
Tanzania

Kenya
Uganda

Nigeria

South Africa

Sudan

Bubble size and number = retail revenue (USD billion) in 2018

12

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Forecast revision: Our SSA revenue forecast revisions reflect lower mobile
voice revenue and higher demand for handset data services
Figure 5: Telecoms retail revenue by service type and total service revenue,
previous and new forecasts, Sub-Saharan Africa, 2013 and 2018 [Source:
Analysys Mason, 2014]

70

We have revised down our current (2013) and forecast


mobile voice revenue figures. In our revised forecast, mobile
voice revenue was USD28.3 billion in 2013 (down from
USD29.6 billion in our previous forecast), and will reach
USD35.6 billion in 2018 (down from USD38.8 billion).

60

Revenue (USD billion)

We review our forecasts every 6 months in light of market


developments and published results from operators and
regulators in SSA.

50
40

Mobile voice revenue will be lower than previously


anticipated, because of competitive and commercial
factors. These include price competition supported by
MTR cuts in South Africa, Nigeria and Tanzania that will
put downward pressure on mobile voice ARPU; and
increased bundling and commoditisation of voice services
as data becomes more accessible and important.

30
20
10
0
Previous
2013

Mobile voice
Mobile messaging

New

Previous

New

2018

Mobile M2M
Fixed voice and narrowband

Mobile handset data


Fixed broadband and IPTV
Mobile broadband
Business network services
Service revenue (retail and wholesale)
Analysys Mason Limited 2014

Conversely, we have revised up our mobile non-messaging


data revenue, particularly for handset data. Our revisions put
mobile handset data revenue at USD5.1 billion in 2013 (up
from USD4.5 billion previously), growing to USD12.5 billion in
2018 (up by 50% on the USD8.5 billion previously forecast).
Increased (higher than previously forecasted) demand for
smartphones (and high-spec feature phones), and
improved high-speed mobile network quality and
coverage, are driving handset data usage and spend.

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

13

Key trends, drivers and assumptions for the mobile market


Figure 6: Summary of key drivers and assumptions for the mobile market, Sub-Saharan Africa [Source: Analysys Mason, 2014]
Forecast trend (20132018)

Drivers and assumptions

Mobile handset data revenue will be


the primary driver of mobile
revenue growth, growing from
USD5.1 billion to USD12.5 billion

Mobile handset data revenue will be the main driver of telecoms retail revenue growth. It will be an
increasingly important component of total retail revenue, as well as the fastest-growing category,
jumping from 11.8% of retail revenue in 2013 to 19.1% in 2018. Underlying drivers are greater
availability of lower-priced devices (low-end smartphones and high-end feature phones); improved 3G
service quality; 4G coverage across major markets; growth of bundled and other innovative mobile data
offers targeting the prepaid market; and increasing take-up of over-the-top (OTT) services, mobile
financial services and mobile Internet services.

Mobile voice ARPU will continue on


a downward trend, from USD4.3 in
2013 to USD3.5 in 2018; messaging
ARPU is also trending downward

Smartphone penetration of the


handset base will increase from
12% in 2013 to 26% in 2018

LTE will be a niche service for the


foreseeable future, accounting for
3% of mobile connections in 2018

Analysys Mason Limited 2014

Mobile voice ARPU will decline at a 3.9% CAGR during 20132018. The imposition of MTR cuts
(including asymmetric rates in many markets) will drive competition and leave room for lower-priced
offers and flat on-net and off-net voice tariffs. Nigeria and South Africa will have the greatest mobile
voice revenue decline associated with MTR cuts during the forecast period.
Mobile voice will remain a critical service, and both connections and traffic will grow, but there will be
greater commoditisation and bundling of voice minutes, and some OTT voice substitution. The impact of
OTT on messaging revenue and ARPU is already high, and this pressure will continue.
Vendors are developing low-cost handsets that will increase affordability, driving penetration. Reducing
the cost of access is a major focus for operators.
Operators are driving adoption through targeted campaigns, the introduction of low cost-handsets,
handset subsidies and by reducing in the cost of mobile data.
LTE has been launched in Nigeria, South Africa, Tanzania and Uganda, but take-up has been limited.
Roll-out has been constrained by spectrum and regulatory challenges in many markets including
Ghana, Kenya, Nigeria and South Africa. It is of potential interest as a fixed substitute, but LTE is likely
to remain a niche service targeted at high-end data users in urban areas during the forecast period.

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

14

Key trends, drivers and assumptions for the fixed market


Figure 7: Summary of key drivers and assumptions for the fixed market, Sub-Saharan Africa [Source: Analysys Mason, 2014]
Forecast trend (20132018)

Drivers and assumptions

Fixed voice connections will


increase only marginally (at a CAGR
of 0.01%); fixed voice revenue will
continue to decline (at a 3.8%
CAGR)

The fixed market in SSA is underdeveloped and underinvested, and will continue to be very small in
comparison to the mobile market. Capital constraints, financial and operational management challenges
at many of the regions incumbents, consumer preference for prepaid/non-contract services, issues over
rights of way, and the difficulty of achieving positive a RoI outside major urban areas are all factors that
will continue to constrain the fixed market.

Fixed voice connections will only increase marginally during the forecast period, from 11.97 million in
2013 to 11.98 million in 2018. The low growth rate is partly the result of fixedmobile substitution.
Fixed voice revenue will decline to USD3.1 billion by 2018 (CAGR 3.8%), and will be a declining
component of overall fixed service revenue, which will reach USD6.6 billion by 2018 (CAGR 1.3%). To
place this in context, mobile service revenue will reach USD55.7 billion in 2018 (CAGR 7.7%).

Fixed broadband connections will


grow significantly (at a CAGR of
13.1%), but from a very low base

Fixed wirelesss share of fixed


broadband connections will
increase from 42% in 2013 to 46% in
2018

Analysys Mason Limited 2014

Fixed broadband growth continues to be strong from a small base, but overall take-up will remain very
low. Population penetration in the region will grow from 0.4% to 0.6% during the forecast period. Fixed
broadband connections will reach 6.75 million in 2018, with nearly half being fixed wireless broadband.
Government-led national broadband plans, coupled with operator investments into fibre networks, will
go some way towards boosting coverage and reducing the cost of services, although most broadband
connections in Africa will still be wireless in 2018.
Fixed wireless is a significant technology in Africa, and is likely to account for the majority of new fixed
broadband connections. We forecast that broadband fixed wireless access (BFWA) connections will
double by 2018, from 1.53 million in 2013, to 3.1 million in 2018.
The share of BFWA of fixed broadband connections has increasingly been driven by WiMAX services,
although in most African markets where WiMAX is in play, there are issues around the high number
(and very small scale and coverage) of WiMAX operators. In some cases, WiMAX licensees are looking
to redeploy their spectrum for LTE, but scale is likely to be a significant constraint.

15

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Key implications and recommendations


Stimulating and monetising use of mobile data

Creative capex strategies for mobile operators

Mobile handset data will drive revenue growth through 2018,


reflecting high demand, better service quality and coverage,
competition, and wider availability of lower-priced devices.

ARPU in Africa is low, and will remain so. Operators wishing


to maximise profitability in this environment must use any
cost sharing or reduction strategies available.

Monetising mobile data demand effectively in SSA is a


challenge; price-led competition is a common MNO strategy.

Tower sharing (and the sell-off of tower assets) has been


particularly prevalent in Africa, reflecting the need for
operators to extend coverage across large geographic areas
without incurring excessive costs. Operators who have not
yet explored this avenue should do so.

Operators can exploit (and drive) demand by making data


packages more flexible, bearing in mind the preference for
prepaid connections and the significant affordability
constraints, and using innovations like shared data plans.

National (and regional) roaming agreements are also


important.

Funding and monetising fixed broadband development

Driving revenue through digital economy services

Most new broadband connections will be wireless, but


extending high-speed fixed broadband services beyond the
enterprise market and the most expensive urban and
suburban neighbourhoods is still a strong revenue objective.

Demand-side stimulation strategies will become increasingly


important for operators, as more people in Africa gain access
to the Internet, and to data services generally.

Neighbourhood-level FTTx deployments do not reach the


mass market, but they can offer useful revenue streams and
test beds for alternative and incumbent operators.

Mobile operators should drive the growing revenue streams


from mobile financial services through additional services
and partnerships, and partner with players like Facebook to
offer zero-rated or bundled data tied to specific applications.

Creative multi-play offers from alternative players such as


Kenyas Zuku show the way to monetise broadband across a
wider audience.

Using the cellular network for M2M, by working with partners


in a few major verticals such as utilities and automotive is
also a solid opportunity.

Analysys Mason Limited 2014

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Executive summary
Regional forecasts and cross-country comparison
Individual country forecasts
About the authors and Analysys Mason

Analysys Mason Limited 2014

16

17

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Geographical coverage: We model the seven largest markets, which will


account for 62% of total SSA telecoms service revenue in 2018
Figure 8: Mobile connections by technology generation and fixed broadband household penetration, by country, 2018 [Source: Analysys Mason, 2014]1
Nigeria

Sudan

2%

2014

2015

Uganda

5%

2013

Ghana

2%

Kenya

2%

2014

2014

2%

Key
Mobile connections by
technology generation

Fixed broadband
household penetration

2G
3G

2011

4G

74%

South Africa

Tanzania

Year of
LTE launch

2012

13%

2012

1%

Countries modelled individually


Countries modelled as part of the region

For a full list of countries modelled as part of the SSA region, please see the accompanying data annex. Mobile connections exclude M2M connections. Fixed broadband household penetration is
calculated as total fixed broadband connections (residential and business) divided by the number of households.

Analysys Mason Limited 2014

18

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Market context: The two most-populated countries Nigeria and South


Africa generated 51% of the regions telecoms retail revenue in 2013
Figure 9: Metrics for Sub-Saharan Africa and the seven SSA countries modelled individually, 2013 [Source: Analysys Mason, 2014]
Telecoms revenue
Population
GDP
GDP per capita
(million) (USD billion) (USD thousand)

Total service
revenue
(USD billion)

Share of
GDP

Population penetration

Total retail
revenue
(USD billion)

Retail spend
per capita
Mobile SIMs
(USD per month)

Fixed
broadband

Ghana

26

50

3.1%

106%

0.3%

Kenya

45

45

4.2%

67%

0.2%

Nigeria

177

515

10

1.9%

71%

0.2%

South Africa

53

401

15

3.7%

14

22

139%

2.4%

Sudan

37

76

2.5%

78%

0.5%

Tanzania

50

33

4.9%

57%

0.1%

Uganda

38

24

4.2%

48%

0.2%

947

1 652

49

3.0%

43

65%

0.4%

Sub-Saharan Africa

The economic contribution from the telecoms industry that is, telecoms revenue as a share of GDP ranges from 1.9% to 4.9% in
SSA. Overall, SSAs telecoms revenue, while growing quickly, significantly lags behind that of other regions.
South Africa has the highest mobile SIM penetration (139%), although Nigeria has more mobile SIMs in absolute terms because of
a higher population. South Africa also has by far the highest fixed broadband population penetration rate in the region, although at
only 2.4% at the end of 2013, this is still extremely low by worldwide standards.
Fixed broadband penetration is very low in all of SSA. Operators are increasingly focusing on rolling out both wireless broadband
access and to a more limited extent fibre. Government national broadband initiatives are expected to increase coverage in South
Africa, Nigeria, Tanzania and Uganda, but penetration will remain very limited during the forecast period.

Analysys Mason Limited 2014

19

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Fixed and mobile penetration: Mobile handset growth and fixed broadband
growth will be solid in SSA, while fixed voice penetration will decline
Figure 11: Connections by service type, and growth rates, Sub-Saharan
Africa, 20132018 [Source: Analysys Mason, 2014]

1.6%

Connection type

80%

1.4%

Mobile handsets
Mobile broadband
Mobile M2M
Fixed voice
Fixed broadband
IPTV

70%

1.2%

60%

1.0%

50%

0.8%
40%
0.6%

30%

0.4%

20%

Mobile handset
Mobile M2M
Fixed broadband
Analysys Mason Limited 2014

2018

2017

2016

2015

2014

2013

0.0%

2012

0%

2011

0.2%

2010

10%

Mobile broadband
Fixed voice
IPTV

Percentage of the population

90%

2009

Percentage of the population

Figure 10: Penetration rate by service type, Sub-Saharan Africa, 20092018


[Source: Analysys Mason, 2014]

Connections (million)
2013
2018
591.7
885.1
15.2
33.5
5.5
35.4
12.0
12.0
3.6
6.8
0.0
0.3

CAGR
20092013 20132018
17.1%
8.4%
44.5%
17.2%
27.3%
45.3%
2.0%
0.0%
23.8%
13.1%
N/a
129.6%

Mobile handsets remain the predominant communications


device in SSA. Handset penetration has been strong, driven
by the introduction of low-cost handsets and smartphones.
The number of mobile handset connections (SIMs) will
increase to 885.1 million in 2018, a penetration of 82.5%.
Non-handset mobile broadband will grow strongly at a 17.2%
CAGR, but population penetration will remain low (3.1% in
2018) because of the preference for handset data services.
Fixed services are underpenetrated in SSA and, despite high
growth, will remain accessible for only a small minority during
the forecast period. Fixed infrastructure is poor and generally
confined to major cities, and competition levels are low.
M2M and IPTV penetration will increase, from a low base.

20

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Mobile penetration: SIM penetration growth will continue in the seven


major markets as affordability and coverage increase
Mobile SIM penetration (excluding M2M) in SSA will increase
from 64% in 2013 to 86% 2018, driven by increasing
affordability of devices and services, and wider coverage.
SSA will have more than 900 million mobile handset and midor large-screen broadband connections by 2018. More than
96% of handset SIMs will still be prepaid.

Figure 12: Active mobile SIM penetration by country (excluding M2M),


Sub-Saharan Africa, 20092018 [Source: Analysys Mason, 2014]

160%

Percentage of the population

140%
120%

Other drivers include demographics (almost 250 million


Africans are aged 10191 and may acquire a handset during
20132018), and demand for mobile Internet services.

100%

Growth rates will slow in all markets during 20132018


compared to 20092013. They will drop from double- to
single-digit rates in all but one of the seven markets
(Uganda). However, penetration remains well below 100% in
most markets, so significant room for growth remains.
Multiple-SIM ownership makes population penetration look
higher than it really is in most African markets. Users swap
networks to take advantage of on-net rates and promotions.

80%
60%
40%

20%

Ghana
Nigeria
Sudan
Uganda
Analysys Mason Limited 2014

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

0%

Kenya
South Africa
Tanzania
Sub-Saharan Africa

South Africa has the highest SIM penetration rate in the


region, although much of this is a result of multiple-SIM
ownership. Tanzania and Uganda are below the regional
average because high proportions of their populations are in
underserved rural areas.
1

U.S. Census Bureau (Washington, DC,2013), International Database. Available at


https://www.census.gov/population/international/data/idb/informationGateway.php.

21

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Mobile connections: 2G will remain the predominant technology in SSA,


while LTE will account for only 3% of mobile connections in 2018
Figure 13: Mobile connections by technology generation (excluding M2M),
and 3G and 4Gs share of connections, Sub-Saharan Africa, 20092018
[Source: Analysys Mason, 2014]

1000

25%

3Gs share of connections will increase from 14% in 2013 to


23% in 2018, which is a relatively slow take-up rate.

900
20%

700
600

15%

500
400

10%

300

200

5%

100

2G

3G

Analysys Mason Limited 2014

4G

3G share

2018

2017

2016

2015

2014

2013

2012

2011

2010

0%
2009

4G share

Percentage of connections

Connections (million)

800

2G connections are predominant in SSA, and will remain


so during the forecast period. 2Gs share of non-M2M
connections will decline from more than 85% in 2013 to 74%.

Operators are still investing in 3G, but capital constraints,


and coverage and quality issues, will keep penetration low.
Regulators have been holding off on the release of 4G
spectrum in some countries (Ghana and Nigeria) in order
to drive MNOs to improve their 3G coverage and QoS.
3G will be more prevalent in South Africa (at more than
one third of connections) than in other markets in SSA.
LTE has been launched on a small scale in Nigeria, South
Africa, Tanzania and Uganda.
Critical spectrum for LTE services is only expected to be
released in most countries in 2015, after the digital
switchover process has been completed. Some small
WiMAX operators are also considering spectrum re-use for
LTE, but scale is likely to be an issue.
LTE will remain niche, confined to high-end data users
(and enterprises) in urban areas in 20132018, accounting
for 3% of non-M2M connections by the end of the period.

22

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Smartphones and LTE: Smartphones will account for 26% of handsets in


SSA by 2018, as device prices decline and users upgrade

12%

50%

10%

10%

2%

0%

0%

Smartphones:

2013
2018

Analysys Mason Limited 2014

LTE:

Uganda

4%

Tanzania

20%

Sudan

6%

South Africa

30%

Nigeria

8%

Kenya

40%

2013
2018

Percentage of connections

60%

Ghana

Percentage of handsets

Figure 14: Smartphones as a percentage of handsets, and LTEs share of


total connections (excluding M2M), Sub-Saharan Africa, 2013 and 2018
[Source: Analysys Mason, 2014]

Most mobile users in SSA use basic or feature phones to


access the mobile network. Smartphones share was below
10% in 2013 in all markets with the exception of Nigeria
(11%) and South Africa (26%). However, this is changing:
smartphones will account for about 26% of handsets in SSA
by 2018, and more than 50% in South Africa.
Demand for mobile content services (including mobile
financial services, music and m-education) particularly
among young consumers is a driver for smartphone takeup. Average smartphone retail prices remain high relative to
income levels and ARPU. Vendors including Microsoft
(Nokia), Huawei, and ZTE are working to reduce device
prices to meet affordability levels, with USD25 viewed as the
threshold. Huawei and Mozilla showcased a prototype
USD25 smartphone at Mobile World Congress (MWC) 2014.
Operators continue to stimulate smartphone adoption via
targeted campaigns, promotions on low-cost smartphones,
and bundled data packages. In wealthier markets such as
South Africa, many feature phone users are converting to
low-cost smartphones, as prices come within reach.
LTE-enabled devices remain out of reach for most users.
This trend will continue through the forecast period and
accounts in part for the forecasted low penetration of LTE
(3% in 2018) in the region.

23

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Mobile ARPU: Decline will slow in most SSA markets, thanks to almost
10% annual growth in handset data ARPU
ARPU in SSA averaged USD6.17 per month in 2013
(excluding M2M), making it well below that of other regions. It
is limited by affordability and the preponderance of prepaid
SIMs and multi-SIM usage. Price competition, often led by
new market entrants, and the impact of MTR cuts, have
driven sustained decline in mobile ARPU in most larger
African markets in recent years. ARPU decline has been
particularly dramatic in South Africa.

Figure 15: Mobile ARPU by country, Sub-Saharan Africa, 20092018


[Source: Analysys Mason, 2014]1

20

ARPU (USD per month)

18
16
14

12

South Africa has the highest ARPU in the region more than
twice that of Ghana, Kenya, Sudan, Tanzania and Uganda.
Nigerias mobile ARPU is expected to fall below the regional
average from 2014, because of increased price competition.

10
8
6
4
2

Ghana
Nigeria
Sudan
Uganda
1

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

Kenya
South Africa
Tanzania
Sub-Saharan Africa

Mobile ARPU is calculated as total mobile service revenue (retail and wholesale), excluding
M2M, divided by total average mobile connections, excluding M2M.

Analysys Mason Limited 2014

We forecast a slower rate of decline in most markets, as


operators begin to explore approaches to differentiation other
than price-led competition, and mobile data usage takes hold.
Mobile ARPU across the region will decline at a CAGR of
2.5% during 20132018, to USD5.44.
South Africas ARPU will stabilise, given growing levels of
data consumption and better network coverage and capacity,
as well as the doubling of the take-up rate of smartphones.
Increased smartphone and 3G take-up in the region will be a
significant driver for stabilising ARPU. Growth in handset
data ARPU (at a CAGR of 9.8%) will largely offset declines in
mobile voice ARPU (at a 3.9% CAGR) during 20132018.

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

24

Fixed services: Africas small fixed broadband market will increasingly lag
behind the non-handset mobile broadband market
Figure 16: Fixed broadband connections by type, and fixed voice, IPTV and
mobile broadband connections, Sub-Saharan Africa, 20092018 [Source:
Analysys Mason, 2014]

35

Connections (million)

30

Fixed services in SSA generally offer poor quality at a high


cost, and have ongoing contract requirements that are not
appealing to (or affordable for) the mass market. Non-handset
mobile broadband connections will become much more
prevalent than fixed broadband during 20132018 (at a
17.2% CAGR) because of wider coverage and lower cost.
DSL is the dominant fixed broadband technology, but its
share is declining despite growth in connections. We forecast
that DSL connections will increase to 3.05 million in 2018, at
a CAGR of 9.4% during 20132018. FTTx will remain limited
to certain major urban and suburban neighbourhoods.

25
20
15

BFWA connections (including those provided by the regions


numerous small WiMAX operators) are growing more quickly.
BFWA will surpass DSL in 2018, accounting for 45.9% of
fixed broadband connections, up from 10.5% in 2013.

10
5

DSL

Cable

FTTH/B

BFWA

Other fixed broadband

Mobile broadband

Fixed voice

IPTV

Analysys Mason Limited 2014

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

The fixed voice market is growing more slowly than the fixed
broadband market, because of fixedmobile substitution.
Multi-play services have been introduced in a few markets (for
example, by alternative service provider Zuku in Kenya), but
their impact on the overall market is limited.
National broadband plans in Nigeria, South Africa, Tanzania
and Uganda may provide expanded high-speed broadband
coverage, and potentially reduce the cost of services.

25

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Fixed broadband: Household fixed broadband penetration in SSA varies


significantly by country, and South Africa is well ahead of the others
Penetration of fixed broadband services (including BWFA) is
very low in SSA and plenty of room for growth remains.
Household penetration stood at 2.0% in 2013, and will
increase to 3.3% in 2018. Fixed broadband services will
continue to struggle to compete with mobile, given higher
upfront costs, more limited coverage, and lack of mobility.

Figure 17: Fixed broadband penetration of households by country,


Sub-Saharan Africa, 20092018 [Source: Analysys Mason, 2014]1

Percentage of households

14%
12%
10%

Fixed broadband providers in Africa have mainly focused


their offerings on the business segment; these customers
tend to be geographically concentrated, and to spend more
and churn less than consumer customers. Providers include
Dark Fibre Africa in South Africa; Liquid Telecom operating in
nine African countries; and MTN Business with operations in
Botswana, Kenya, Namibia, South Africa and Zambia.

8%
6%
4%
2%

Ghana
Nigeria
Sudan
Uganda
1

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

0%

Kenya
South Africa
Tanzania
Sub-Saharan Africa

Fixed broadband penetration is calculated as total fixed broadband connections (residential


and business) divided by the number of households.

Analysys Mason Limited 2014

South Africa has significantly higher penetration than other


SSA markets, because of a stronger financial base and
greater customer ability to pay for fixed broadband services,
as well as more competition (for example, from second fixed
broadband provider Neotel). Both incumbent Telkom SA and
challenger Neotel have invested significantly in network buildout. Fixed broadband household penetration in South Africa
will increase from 9.0% to 13.4% by 2018.
The next-most-penetrated market is Sudan, which will still be
below 5% household penetration in 2018; most other markets
will have household penetration of 3% or below.

26

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Revenue and ARPU: Mobile voice and handset data will drive revenue
growth through 2018, while mobile data will help maintain mobile ARPU

30.0

20

25.0
20.0

15

15.0
10

10.0

Mobile voice
Mobile messaging
Mobile handset data
Mobile broadband
Mobile M2M
Mobile ARPU
1

2018

2017

2016

2015

2014

2013

0.0

2012

2011

5.0

2010

ARPU/ASPU (USD per month)

25

2009

Revenue (USD billion)

Figure 18: Telecoms retail revenue by service type, fixed voice and fixed
broadband ASPU, and mobile ARPU, Sub-Saharan Africa, 20092018
[Source: Analysys Mason, 2014]1

2
3
4

Includes USB modem, and mid- and large-screen, but not handset-based data.
Includes narrowband, VoBB and dial-up Internet access.
Includes retail and wholesale revenue.

Fixed voice and narrowband


Fixed broadband and IPTV
Business network services

Telecoms retail revenue will grow slightly more slowly during


20132018 than during 20092013. Higher revenue from
mobile voice and handset data, and fixed broadband and
IPTV, will offset declining revenue from mobile messaging
and fixed voice/narrowband. All ARPU rates will decline.

Fixed voice ASPU


Fixed broadband ASPU

Mobile handset datas share of total revenue will almost


double by 2018, reflecting the role of mobile devices as the
main Internet access point for most users in Africa.

Mobile ARPU is calculated as total mobile service revenue (retail and wholesale), excluding
M2M, divided by total average mobile connections, excluding M2M.

Analysys Mason Limited 2014

Figure 19: Telecoms retail revenue by service type, total service revenue
and growth rates, Sub-Saharan Africa, 20132018 [Source: Analysys Mason,
2014]
Revenue (USD billion)
CAGR
Service type
2013
2018 20092013 20132018
Mobile voice
28.3
35.6
6.8%
4.7%
Mobile messaging
2.5
2.2
9.0%
2.7%
Mobile handset data
5.1
12.5
52.0%
19.6%
Mobile broadband2
1.4
2.7
38.3%
14.5%
M2M
0.077
0.485
22.7%
44.6%
3
Fixed voice and narrowband
3.7
3.0
7.2%
4.2%
Fixed broadband and IPTV
0.8
1.2
24.3%
8.7%
Business network services
1.5
2.1
1.1%
7.0%
Total retail revenue
43.4
59.9
8.2%
6.7%
Total service revenue4
48.7
65.3
7.0%
6.0%

27

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Service revenue: South Africas share will decline slightly, reflecting the
relative maturity of its market
Figure 20: Telecoms service revenue by country, Sub-Saharan Africa, 2013
[Source: Analysys Mason, 2014]

Figure 21: Telecoms service revenue by country, Sub-Saharan Africa, 2018


[Source: Analysys Mason, 2014]

Ghana
3% Kenya
4%

Rest of SSA
33%

Nigeria
20%

Total service
revenue 2013:
USD49 billion

Uganda
2%
Tanzania
3%
Sudan
4%

South Africa
31%

Ghana
Kenya
3%
4%

Nigeria
20%

Rest of SSA
38%

Total service
revenue 2018:
USD65 billion

South Africa
26%
Uganda
3%
Tanzania
Sudan
3%
3%

Telecoms service revenue in SSA will grow from USD49 billion in 2013 to USD65 billion in 2018, at a 4.5% CAGR.
The distribution of telecoms service revenue by country will remain largely unchanged during the next 5 years, although South
Africas share will decline from 31% to 26%, reflecting the greater maturity of (and competition in) its market in comparison with
smaller markets in the region.

Analysys Mason Limited 2014

28

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Revenue mix: Mobile revenue will continue to dominate the revenue mix,
and only South Africa will have a significant level of fixed revenue

Revenue (USD billion)

Figure 22: Telecoms retail revenue by service type, and total service revenue (retail and wholesale), by country, Sub-Saharan Africa, 2013 and 2018 [Source:
Analysys Mason, 2014]

18
16
14
12
10
8
6
4
2
0

2013

2018

Ghana

2013

2018

Kenya
Fixed retail

2013

2018

Nigeria
Mobile retail

2013

2018

South Africa

2013

2018

Sudan

2013

2018

Tanzania

2013

2018

Uganda

Service revenue (retail and wholesale)

Mobile services share of retail revenue will increase from 86.2% in 2013 to 89.5% in 2018. Mobile retail revenue growth will range
from a CAGR of 4.0% in South Africa to 10.0% in Uganda during 20132018. The main drivers will be increased mobile penetration,
wider mobile coverage and smartphone take-up, which will stimulate data usage and spending.
Fixed revenue will grow in all markets except Sudan. CAGRs vary from 0.8% in South Africa to 8.6% in Ghana. Overall growth is
relatively slow, and will be largely driven by increasing demand for fixed broadband connectivity, which remains unaffordable or
inaccessible for many. Total fixed revenue will continue to be a fraction of mobile revenue.
Analysys Mason Limited 2014

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Executive summary
Regional forecasts and cross-country comparison
Individual country forecasts
About the authors and Analysys Mason

Analysys Mason Limited 2014

29

30

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Ghana: Service revenue will reach GHS3.6 billion (USD1.9 billion) in


2018, driven by handset data, while traditional services remain flat
Figure 23: Telecoms retail revenue by service type and total service revenue
(retail and wholesale), Ghana, 20092018 [Source: Analysys Mason, 2014]

Revenue (GHS billion)


CAGR
2013
2018 20092013 20132018
Mobile voice
1838.7
1931.9
13.1%
1.0%
Mobile messaging
140.3
149.4
21.6%
1.3%
Mobile handset data
157.7
602.7
144.6%
30.8%
Mobile broadband1
27.1
58.1
78.7%
16.5%
Mobile M2M
0.000
9.970
N/a
N/a
2
Fixed voice and narrowband
28.3
19.6
10.2%
7.1%
Fixed broadband and IPTV
91.3
162.6
27.2%
12.3%
Business network services
26.6
38.4
21.5%
7.6%
Total retail revenue
2310.1
2972.8
15.8%
5.2%
Total service revenue3
2856.9
3597.5
16.5%
4.7%

4000

Service type

3500

Revenue (GHS million)

Figure 24: Telecoms retail revenue by service type, total service revenue and
growth rates, Ghana, 20132018 [Source: Analysys Mason, 2014]

3000
2500
2000
1500

1000

1
2

500

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

Includes USB modem, and mid- and large-screen, but not handset-based data.
Includes narrowband, VoBB and dial-up Internet access.
Includes retail and wholesale revenue.

Figure 25: Connections by type, and growth rates, Ghana, 20132018


[Source: Analysys Mason, 2014]
Connection type

Mobile voice
Mobile M2M
Mobile messaging
Fixed voice and narrowband
Fixed broadband and IPTV
Mobile handset data
Business network services
Mobile broadband
Service revenue (retail and wholesale)
Analysys Mason Limited 2014

Mobile handsets
Mobile broadband
Mobile M2M
Fixed voice
Fixed broadband
IPTV
4 Not available.

Connections (million)
2013
2018
27.7
36.7
0.3
0.7
0.0
0.5
0.3
0.3
0.1
0.2
0.0
0.0

CAGR
20092013 20132018
17.1%
5.8%
81.1%
18.3%
N/a
N/a
1.0%
0.1%
29.6%
13.5%
N/a
N/a

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

31

Ghana: Key trends, drivers and assumptions


Figure 26: Summary of key forecast drivers and assumptions, Ghana [Source: Analysys Mason, 2014]
Forecast trend (20132018)

Drivers and assumptions

Ghanas smartphone penetration


will increase from 3% in 2013 to 9%
in 2018

Data-focused strategies from Ghanas operators including Airtel, MTN, Tigo and Vodafone will involve
them pushing tailored services like mobile money and bundled WhatsApp as well as other apps that can
be accessed on smartphones using zero-rated data.

Handset data will be the main driver


of mobile revenue growth, growing
at a CAGR of 30.8%

LTE will remain a niche service,


accounting for 4% of mobile
connections in 2018

Fixed broadband penetration is


extremely low, but the number of
active lines is increasing, at a
CAGR of 13.5%

Analysys Mason Limited 2014

Reducing the cost of accessing smartphones is an important area of focus for operators. We forecast
that smartphones will account for 9% of handsets by 2018.
Mobile handset data is driving revenue growth in Ghana, as it is elsewhere in SSA. Drivers of data takeup include the tripling of smartphone penetration and the increased appeal of mobile services such as
mobile money.
We forecast that handset data revenue will grow at a strong CAGR of 30.8% during 20132018, while
revenue from traditional mobile voice and messaging services will remain flat.
In 2013, the NCA awarded technologically neutral BWA licences to Surfline, BLU Telecoms (formerly GKwiknet) and Goldkey Properties. Surfline launched FD-LTE services in June 2014 and BLU Telecoms
plans to launch LTE services during 2014. The regulator has no plans to issue further 4G licences in the
near future but is planning to free up spectrum by 2015 following the digital switchover.
We expect 4G/LTE to have a limited impact during the forecast period and remain a niche service with
only 1.56 million mobile connections (4% of mobile connections) by 2018.
Incumbent Vodafone Ghana leads the market by far with a market share of more than 90% at the end of
2013. The operator has the most extensive network, with a presence in all the regional capitals.
Lack of competition has almost certainly constrained the market, but Vodafone Ghanas fixed network
investment of GHS50 million (USD24.5 million) since 2010 has also stimulated market growth.
Fixed broadband connections will grow but will still remain far behind mobile broadband connections.

32

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Ghana mobile: Fines imposed by the regulator for poor service


quality are likely to drive increased operator investment
Percentage of the
population, handsets
or SIMs

Figure 27: Mobile, smartphone and 4G penetration rates, Ghana, 20092018


[Source: Analysys Mason, 2014]
140%
120%
100%
80%
60%
40%
20%
0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Mobile penetration of population:
Smartphone share of handsets

Including M2M

Excluding M2M

4G share of SIMs (excluding M2M)

ARPU (GHS per month)

Figure 28: ARPU rates by type, Ghana, 20092018 [Source: Analysys


Mason, 2014]

10

Operators are increasingly challenged to improve the quality


of their networks, given the increase in network disruptions.
Fines imposed by the regulator for poor QoS are likely to
stimulate further operator investment and consumers will
demand service improvement.
Handset penetration growth is expected to slow down during
the forecast period, reaching 123% in 2018, up from 105% in
2013.
LTE will remain a niche service at only 4% penetration of
mobile connections in 2018.
The regulator is holding back on providing further LTE
licences, partly to drive MNO focus on growing 3G usage.

8
6

Additional spectrum will be available to operators in 2015


following the completion of the digital switchover.

4
2
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Mobile ARPU

Ghanas mobile market penetration continued to increase,


reaching 105.7% in 2013 (excluding M2M). Significant pricebased competition has put downward pressure on retail tariffs
and encouraged multiple-SIM usage.

Handset ARPU

Handset data ARPU

Mobile ARPU is calculated as total mobile service revenue (retail and wholesale), excluding
M2M, divided by total average mobile connections, excluding M2M.

Analysys Mason Limited 2014

Strong growth in handset data ARPU (at a CAGR of 22.8%


during 20132018) will be driven by increased penetration of
smartphones and increased adoption of mobile money
services.

33

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Ghana fixed: The fixed market is well behind the mobile market,
but fixed broadband growth will be steady, driven by BFWA

Percentage
of the population

Figure 29: Fixed penetration rates by service type, Ghana, 20092018


[Source: Analysys Mason, 2014]
1.2%

1.0%
0.8%

Fixed broadband connections will grow at a CAGR of 13.5%.


DSL will remain dominant in the fixed broadband market,
accounting for 80% of fixed broadband connections by 2018.

0.6%
0.4%
0.2%
0.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fixed voice

Fixed broadband

IPTV

Figure 30: Fixed ASPU rates by service type, Ghana, 20092018 [Source:
Analysys Mason, 2014]
120

ASPU (GHS per month)

Fixed penetration is extremely low in Ghana. Fixed voice


population penetration stood at 1.0% in 2013 (4.6% of
households) while fixed broadband population penetration
stood at 0.3% (1.4% of households). Fixed voice connections
will continue to decline because of fixedmobile substitution.

100
80
60
40
20
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fixed voice ASPU

Analysys Mason Limited 2014

Fixed broadband ASPU

Fixed wireless technology will remain important. Some of the


WiMAX operators that compete with Vodafones DSL
services include Internet Ghana and DiscoveryTel Ghana, but
WIMAX services are limited to a few main cities.
In March 2013, the regulator issued three technology-neutral
broadband wireless access licences in the 2.6GHz band. The
new BWA licensees are deploying LTE services instead of
WIMAX. Surfline commercially launched LTE services in
June 2014 and BLU Telecoms plans to launch LTE services
in the latter part of 2014.
We forecast that fixed voice revenue will decline to
USD11 million in 2018 at a CAGR of 6.9%, while fixed
broadband revenue will grow at a CAGR of 12.2% during
20132018.

34

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Kenya: Service revenue will reach KES205.4 billion (USD2.5 billon)


in 2018, driven by handset and non-handset mobile broadband
Figure 31: Telecoms retail revenue by service type and total service revenue
(retail and wholesale), Kenya, 20092018 [Source: Analysys Mason, 2014]

Revenue (KES billion)


CAGR
2013
2018 20092013 20132018
Mobile voice
77.3
82.6
6.2%
1.3%
Mobile messaging
13.2
13.7
19.4%
0.7%
Mobile handset data
34.4
68.3
43.9%
14.7%
Mobile broadband1
4.7
10.9
152.5%
18.3%
Mobile M2M
0.168
2.765
N/a
75.1%
2
Fixed voice and narrowband
1.2
0.6
32.5%
13.4%
Fixed broadband and IPTV
5.3
7.9
36.5%
8.0%
Business network services
2.4
2.7
1.4%
2.6%
Total retail revenue
138.8
189.5
13.1%
6.4%
Total service revenue3
155.9
205.4
11.6%
5.7%

250

Revenue (KES billion)

Figure 32: Telecoms retail revenue by service type, total service revenue and
growth rates, Kenya, 20132018 [Source: Analysys Mason, 2014]
Service type

200
150
100

50

1
2
3

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

Includes USB modem, and mid- and large-screen, but not handset-based data.
Includes narrowband, VoBB and dial-up Internet access.
Includes retail and wholesale revenue.

Figure 33: Connections by type, and growth rates, Kenya, 20132018


[Source: Analysys Mason, 2014]
Connection type

Mobile voice
Mobile M2M
Mobile messaging
Fixed voice and narrowband
Fixed broadband and IPTV
Mobile handset data
Business network services
Mobile broadband
Service revenue (retail and wholesale)
Analysys Mason Limited 2014

Mobile handsets
Mobile broadband
Mobile M2M
Fixed voice
Fixed broadband
IPTV
4 Not available.

Connections (million)
2013
2018
29.8
41.6
0.3
0.9
0.0
0.7
0.2
0.2
0.1
0.2
0.0
0.0

CAGR
20092013 20132018
11.4%
6.9%
140.9%
21.6%
N/a
70.0%
26.4%
4.5%
44.9%
16.4%
N/a
24.8%

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

35

Kenya: Key trends, drivers and assumptions


Figure 34: Summary of key drivers and assumptions, Kenya [Source: Analysys Mason, 2014]
Forecast trend (20132018)

Drivers and assumptions

Increased smartphone penetration


and take-up of mobile value-added
services (VAS) are driving growth
of handset data revenue, at a CAGR
of 14.7%

The introduction of low-cost smartphones and associated data plans is expected to drive an increase in
handset data revenue.

Kenyas operators are aggressively promoting smartphone take-up leading operator Safaricom has
stopped selling feature phones and is driving smartphone take-up through the introduction of a low-cost
smartphone Yolo. Other players are expected to follow suit.

Kenya has led the world in adoption of mobile financial services. This has been a major contributor to
the growth of mobile ARPU and has both driven and been driven by mobile handset data adoption.
Safaricoms high market share of mobile services has been a factor in the success of the M-Pesa
mobile money offering, which is now being replicated across Africa and elsewhere.
We forecast that smartphones will account for 8% of handsets in 2018, driving a CAGR of 14.7% for
handset data revenue in 20132018.

Growth in LTE will be slow and LTE


will only account for 3% of mobile
connections in 2018

Growth in fixed broadband revenue


will more than compensate for the
decline in fixed voice revenue

Analysys Mason Limited 2014

LTE has not been deployed in Kenya, because the government is holding on to critical spectrum in
order to drive the construction of an open-access wholesale LTE network via a public private
partnership (PPP) within the 700MHz and 2.6GHz bands by 2015. This strategy is complex and we
foresee delays in the process, which will impact the timing of commercial availability of LTE.
We therefore forecast slow growth in LTE, which will only account for 3% of mobile connections in 2018.
Fixed broadband connections are expected to grow at a CAGR of 16.4% because of pent-up demand
for residential broadband services, which will drive growth in fixed broadband revenue.

We forecast that fixed broadband revenue will reach KES7.9 billion (USD94 million) at a CAGR of 8%
during 20132018. This will more than offset the decline in fixed voice revenue, which will decline to
KES0.6 billion (USD7 million) in 2018 at a CAGR of 13.4% during 20132018. Fixed voice revenue
declines are the result of fixedmobile substitution and lower ARPU for fixed voice services.

36

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Kenya mobile: Kenya is the leading country in Africa in terms of


mobile money services, which have driven mobile data growth
Percentage of the
population, handsets
or SIMs

Figure 35: Mobile, smartphone and 4G penetration rates, Kenya, 20092018


[Source: Analysys Mason, 2014]
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Mobile penetration of population:
Smartphone share of handsets

Including M2M

Excluding M2M

4G share of SIMs (excluding M2M)

ARPU (KES per month)

Figure 36: ARPU rates by type, Kenya, 20092018 [Source: Analysys


Mason, 2014]
500

400
300
200
100
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Mobile ARPU

Handset ARPU

Handset data ARPU

Mobile ARPU is calculated as total mobile service revenue (retail and wholesale), excluding
M2M, divided by total average mobile connections, excluding M2M.

Analysys Mason Limited 2014

Kenya is the economic hub of East Africa, and has a vibrant


ICT market. Mobile SIM penetration reached 67% in 2013
(excluding M2M) and is expected to accelerate in the next 5
years to reach 83% in 2018. Handset penetration stood at
66% in 2013.
Mobile coverage is increasing, making mobile services
more ubiquitous and improving user experience.
Competitive pricing of mobile services (data and voice) is
promoting growth.
LTE will remain a niche service, only accounting for 3% of
connections in 2018. We do not expect any operator to
launch LTE in the short term because of spectrum
constraints. Both Safaricom and Yu exited Kenyas proposed
wholesale LTE consortium because of delays in working out
the shareholding details. In the meantime, Safaricom has
demanded its own LTE spectrum. The regulator is unlikely to
agree to this in the near future.
Smartphone penetration will increase from 2% of handsets in
2013 to 8% in 2018, driven by greater availability of low-cost
smartphones and demand for mobile data and VAS.
We forecast that handset data ARPU will grow at a CAGR of
7.1% in 20132018, driven by widespread use of mobile
money services and an increase in smartphone penetration.

37

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Kenya fixed: We forecast slow but steady growth in fixed


broadband, driven by innovative alternative providers like Zuku

Percentage
of the population

Figure 37: Fixed penetration rates by service type, Kenya, 20092018


[Source: Analysys Mason, 2014]
2.0%

We forecast that fixed broadband connections will grow


strongly from a low base, at a CAGR of 16.4% in 20132018.

1.5%
1.0%

The fixed broadband market has grown in recent years as


operators have started to tap into demand from residential
customers.

0.5%
0.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fixed voice

Fixed broadband

IPTV

Figure 38: Fixed ASPU rates by service type, Kenya, 20092018 [Source:
Analysys Mason, 2014]
10000

ASPU (KES per month)

Fixed penetration is extremely low in Kenya: 0.4% of


population for voice (2.1% of households) and 0.2% for
broadband (1% of households) in 2013.

8000

Zuku (Wananchi) has become the primary mass-market


fixed broadband operator in Kenya in the past few years;
the other operators target enterprises. Zuku therefore has
significantly more subscribers than the other operators.
Zukus innovative bundling and pricing are likely to drive
growth in fixed broadband, as customers are attracted by
the low-cost, triple-play model.
We forecast growth in fixed broadband revenue at a CAGR
of 7.8% in 20132018 because of solid underlying growth in
connections. However, both coverage and demand will
remain very low overall outside urban areas.

6000
4000
2000
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fixed voice ASPU

Analysys Mason Limited 2014

Fixed broadband ASPU

38

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Nigeria: Service revenue will reach NGN2.1 trillion (USD13.1 billion)


in 2018 because of handset data growth
Figure 39: Telecoms retail revenue by service type and total service revenue
(retail and wholesale), Nigeria, 20092018 [Source: Analysys Mason, 2014]

Revenue (NGN billion)


CAGR
2013
2018 20092013 20132018
Mobile voice
1082.3
1266.4
0.9%
3.2%
Mobile messaging
42.4
36
4.0%
3.2%
Mobile handset data
169.6
555.6
97.0%
26.8%
Mobile broadband1
12.2
24.8
49.7%
15.2%
Mobile M2M
0.059
18.562
N/a
215.4%
Fixed voice and narrowband2
6.7
2.0
46.6%
21.6%
Fixed broadband and IPTV
6.2
11.4
27.1%
13.0%
Business network services
11.0
11.8
15.1%
1.4%
Total retail revenue
1330.6
1926.7
2.6%
7.7%
Total service revenue3
1502.7
2094.6
2.6%
6.9%
Service type

1800
1600

Revenue (NGN billion)

Figure 40: Telecoms retail revenue by service type, total service revenue and
growth rates, Nigeria, 20132018 [Source: Analysys Mason, 2014]

1400
1200
1000
800
600
400

1
2

200

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

Includes USB modem, and mid- and large-screen, but not handset-based data.
Includes narrowband, VoBB and dial-up Internet access.
Includes retail and wholesale revenue.

Figure 41: Connections by type, and growth rates, Nigeria, 20132018


[Source: Analysys Mason, 2014]
Connection type

Mobile voice
Mobile M2M
Mobile messaging
Fixed voice and narrowband
Fixed broadband and IPTV
Mobile handset data
Business network services
Mobile broadband
Service revenue (retail and wholesale)
Analysys Mason Limited 2014

Mobile handsets
Mobile broadband
Mobile M2M
Fixed voice
Fixed broadband
IPTV
4 Not available.

Connections (million)
2013
2018
123.7
179.0
1.1
2.7
0.0
6.6
0.3
0.3
0.4
0.8
0.0
0.0

CAGR
20092013 20132018
14.1%
7.7%
55.8%
20.2%
N/a
223.1%
29.9%
3.9%
44.9%
18.4%
N/a
114.8%

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

39

Nigeria: Key trends, drivers and assumptions


Figure 42: Summary of key drivers and assumptions, Nigeria [Source: Analysys Mason, 2014]
Forecast trend (20132018)

Drivers and assumptions

Growth in handset data revenue will


be solid, at a CAGR of 26.8%

Increased smartphone take-up will drive data usage and spend in Nigeria. We forecast smartphones will
account for 18% of connections by 2018, up from 11% in 2013, one of the highest penetrations in SSA.

MTR cuts will leave room for lower


tariffs, and mobile voice revenue
will increase at a CAGR of 3.2%

LTE adoption will remain a niche


service and only account for 1% of
mobile connections in 2018

BFWA will be the main contributor


to growth of fixed broadband
connections reaching 755 556 in
2018 at a CAGR of 19.4%

Analysys Mason Limited 2014

Handset data ARPU will increase in the next 5 years to reach NGN266.6 per month, up from NGN120
at a CAGR of 17.3%. We forecast solid growth in handset data revenue at a CAGR of 26.8% during
20132018 because of an increase in smartphone penetration.
We assume price competition will intensify in the prepaid market, impacting voice ARPU in particular.
Further MTR cuts imposed in 20142016 will leave room for lower-priced offers and flat on-net and offnet tariffs. Price per minute is expected to decline significantly at a CAGR of 14%.
We forecast that mobile retail voice revenue will increase at a CAGR of 3.2% in 20132018 because of
growth in outgoing mobile voice traffic (mainly because of growth in subscribers) at a CAGR of 19.9%.
LTE remains a niche service, confined to the main cities of Abuja, Ibadan and Lagos. This will continue
because operators with scale cannot enter the market because of spectrum constraints.
Operators are likely to focus on boosting take-up of 3G for the foreseeable future since its share of
mobile connections is low at 11% in 2013.
LTE is expected to pick up after 2015 when the NCC makes the 2.6GHz spectrum available. We
forecast that LTE will represent 1% of mobile connections in 2018.
Fixed broadband connections will reach 842 289 in 2018 at a CAGR of 19.4% during 20132018 from a
very low base. Nigerias fixed telecoms market is highly fragmented and ongoing financial challenges
facing the incumbent operator have been a significant factor constraining market development.
BFWA (mainly WiMAX) will continue to be the main technology used to deliver fixed broadband
services in Nigeria. We forecast BFWA connections will grow to 755 556 in 2018 at a CAGR of 19.4%.

40

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Nigeria mobile: Nigeria is the largest mobile market in SSA in


terms of subscriber numbers, but not revenue
Percentage of the
population, handsets
or SIMs

Figure 43: Mobile, smartphone and 4G penetration rates, Nigeria, 20092018


[Source: Analysys Mason, 2014]
100%

80%
60%
40%
20%
0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Mobile penetration of population:


Smartphone share of handsets

Including M2M

Excluding M2M

4G share of SIMs (excluding M2M)

ARPU (NGN per month)

Figure 44: ARPU rates by type, Nigeria, 20092018 [Source: Analysys


Mason, 2014]
2000

1500
1000
500
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Mobile ARPU
1

Handset ARPU

Handset data ARPU

Mobile ARPU is calculated as total mobile service revenue (retail and wholesale), excluding
M2M, divided by total average mobile connections, excluding M2M.

Analysys Mason Limited 2014

Nigerias mobile market continues to grow despite challenges


related to unreliable power supplies and poor QoS.
Mobile penetration is relatively low, standing at 71%
(excluding M2M) in 2013, but Nigeria is the largest mobile
market in Africa in terms of subscriber numbers (124.8 million
subscribers in 2013). By 2018, mobile penetration will grow to
90%.
Price-based competition is a notable feature of the market
and is expected to drive market growth.
Fines imposed by the regulator for poor QoS are driving
network investment and will likely lead to improvements in
service quality.
LTE has been launched on a small scale. Nigerias major
MNOs Airtel, Etisalat, Globacom and MTN are focusing on
3G services and have not launched 4G because of spectrum
constraints the 2.6GHz spectrum should be made available
in 2015. LTE will account for only 1% of connections by 2018.
We expect price competition to persist in the short term,
driven by declining MTRs. Mobile voice ARPU will decline at
a 4.5% CAGR.

Handset data ARPU growth will be solid at a CAGR of 17.3%


during 20132018 because of increased smartphone
penetration.

41

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Nigeria fixed: The fixed broadband market is underdeveloped


because no operator has reached scale

Percentage
of the population

Figure 45: Fixed penetration rates by service type, Nigeria, 20092018


[Source: Analysys Mason, 2014]
1.0%

Incumbent operator NITEL is struggling, and investment in


fixed infrastructure is limited. The market is fragmented
and no player has been able to reach significant scale.

0.8%

0.6%
0.4%

NITEL is up for sale and underwent a liquidation process


in early 2014.

0.2%
0.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fixed voice

Fixed broadband

IPTV

Figure 46: Fixed ASPU rates by service type, Nigeria, 20092018 [Source:
Analysys Mason, 2014]
6000

ASPU (NGN per month)

The fixed broadband market is very undeveloped in Nigeria,


but has high growth potential. Household penetration was
only 1% in 2013.

5000
4000
3000

Fixed broadband connections will still be well below 1 million


by 2018. They will grow at a CAGR of 18.4% during the
forecast period. Growth will mainly come from small BFWA
players that provide limited urban coverage.
BFWA will account for 89.7% of fixed broadband
connections in 2018. Operators include 21st Century,
ipNX, MTN Nigeria and Swift Networks. The main
technology is WiMAX, which has been endorsed by both
the government and regulator NCC.
FTTH operators like ipNX have also set ambitious
coverage targets.

2000
1000
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fixed voice ASPU

Analysys Mason Limited 2014

Fixed broadband ASPU

Fixedmobile voice substitution is likely to continue in the


forecast period because mobile prices are lower than fixed.
Fixed voice penetration will only reach 0.1% of population in
2018 (1% of households).

42

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

South Africa: Telecoms service revenue will reach ZAR137.7 billion


(USD16.9 billion) in 2018, driven by solid growth in handset data
Figure 47: Telecoms retail revenue by service type and total service revenue
(retail and wholesale), South Africa, 20092018 [Source: Analysys Mason,
2014]

Revenue (ZAR billion)


CAGR
2013
2018 20092013 20132018
Mobile voice
56.7
52.2
2.0%
1.7%
Mobile messaging
6.3
4.6
1.3%
6.1%
Mobile handset data
16.5
35.9
30.1%
16.8%
Mobile broadband1
6.1
11.1
33.5%
12.6%
Mobile M2M
0.415
0.974
19.4%
18.6%
2
Fixed voice and narrowband
16.5
12.5
7.2%
5.3%
Fixed broadband and IPTV
2.8
4.0
21.6%
7.4%
Business network services
7.3
11.2
3.6%
8.9%
Total retail revenue
112.6
132.4
4.1%
3.3%
Total service revenue3
121.9
137.7
1.5%
2.5%

160

Service type

140

Revenue (ZAR billion)

Figure 48: Telecoms retail revenue by service type, total service revenue and
growth rates, South Africa, 20132018 [Source: Analysys Mason, 2014]

120
100
80
60

40

1
2

20

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

Includes USB modem, and mid- and large-screen, but not handset-based data.
Includes narrowband, VoBB and dial-up Internet access.
Includes retail and wholesale revenue.

Figure 49: Connections by type, and growth rates, South Africa, 20132018
[Source: Analysys Mason, 2014]
Connection type

Mobile voice
Mobile M2M
Mobile messaging
Fixed voice and narrowband
Fixed broadband and IPTV
Mobile handset data
Business network services
Mobile broadband
Service revenue (retail and wholesale)
Analysys Mason Limited 2014

Mobile handsets
Mobile broadband
Mobile M2M
Fixed voice
Fixed broadband
4

Not available.
IPTV

Connections (million)
2013
2018
66.2
74.7
4.5
8.6
3.0
8.9
3.9
3.7

CAGR
20092013 20132018
9.8%
2.4%
37.2%
13.9%
24.2%
24.0%
2.3%
1.4%

1.3

2.1

18.0%

10.1%

0.0

0.2

N/a

N/a

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

43

South Africa: Key trends, drivers and assumptions


Figure 50: Summary of key drivers and assumptions, South Africa [Source: Analysys Mason, 2014]
Forecast trend (20132018)

Drivers and assumptions

MTR cuts will put downward


pressure on mobile voice ARPU
(which will decline at a 4.3%
CAGR) and revenue

We expect the cut in MTRs (50% between 2013 and 2014, with asymmetric rates in 2014 between the
two largest operators Vodacom and MTN and their main competitors Cell C and Telkom Mobile) to
stimulate price competition and leave room for lower-priced offers and flat on- and off-net tariffs.

Smartphone penetration will grow


from 26% of handsets in 2013 to
51% in 2018

LTE will be a niche service targeted


towards high-end users and
corporate clients, accounting for
11% of mobile connections in 2018

Fixed broadband connections and


revenue will increase at a CAGR of
10.1% and 7.4% respectively in
20132018

We forecast that mobile voice ARPU will decline from USD9 to USD7 at a of CAGR 4.3%, generating
a CAGR of 1.7% for mobile voice revenue in 20132018.
We expect leading operators to continue stimulating smartphone adoption through competitive data
packages targeted towards different market segments and through the introduction of low-cost
handsets.
Smartphones will account for 51% of handsets in 2018.
LTE has been deployed by most operators but on a limited scale. Operators note that LTE coverage is
also limited by regulatory delays in releasing critical spectrum (in the prime 700MHz and 800MHz
bands). In the meantime we expect operators to focus on recouping significant investments made in
their 3G networks.
LTE is expected to remain a niche service targeted towards high-end data users and corporate
customers. It will account for 11% of mobile connections in 2018.
Fixed broadband growth will continue to be solid, driven by increased competition in the market.

Incumbent operator Telkom has invested in VDSL technology and is migrating to a next-generation
network with a strong focus on FTTx. Neotel launched an FWA LTE service in August 2013 as
competition to ADSL services. The pending merger between Neotel and Vodacom will also boost
competition.

Analysys Mason Limited 2014

A new entrant for FTTH has been proposed, but we expect the impact on the market to be limited.

44

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

South Africa mobile: South Africa has the highest smartphone


penetration in SSA
Percentage of the
population, handsets
or SIMs

Figure 51: Mobile, smartphone and 4G penetration rates, South Africa,


20092018 [Source: Analysys Mason, 2014]
175%
150%
125%
100%
75%
50%
25%
0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Mobile penetration of population:
Smartphone share of handsets

Including M2M

Excluding M2M

4G share of SIMs (excluding M2M)

ARPU (ZAR per month)

Figure 52: ARPU rates by type, South Africa, 20092018 [Source: Analysys
Mason, 2014]
160
140
120
100
80
60
40
20
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Mobile ARPU
1

Handset ARPU

Handset data ARPU

Mobile ARPU is calculated as total mobile service revenue (retail and wholesale), excluding
M2M, divided by total average mobile connections, excluding M2M.

Analysys Mason Limited 2014

Mobile SIM penetration reached 133.5% (excluding M2M) in


2013, of which 125% for handsets, and 8.5% for non-handset
mobile broadband (the highest in SSA).
Smartphone penetration is expected to grow rapidly.
Operators will focus on reducing the barriers to entry through
the provision of low-cost smartphones. Smartphones will
account for 51% of handsets in 2018, up from 26% in 2013.
Mobile data take-up will continue to accelerate, driven by
intense competition in data bundle pricing.
LTE penetration will grow slowly in the next 5 years, reaching
11% of mobile connections in 2018. We expect that the LTE
spectrum constraint situation will not be resolved until 2015
2016, following the digital switchover.
Government plans to distribute the 700800MHz spectrum
are being delayed by the lack of public roll-out of DTT set-top
boxes. In the meantime, LTE in South Africa is likely to
continue to be a high-end service focused on corporate
customers and high end data users.
Mobile voice ARPU will decline at a CAGR of 4.3% during
20132018. The 50% MTR cut in March 2014 and expected
further MTR cuts (currently the subject of a legal dispute)
have already put pressure on mobile tariffs. We forecast
growth in handset data ARPU at a CAGR of 13.7% during the
forecast period.

45

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

South Africa fixed: The planned national broadband plan and


merger between Neotel and Vodacom will stimulate the market

Percentage
of the population

Figure 53: Fixed penetration rates by service type, South Africa, 20092018
[Source: Analysys Mason, 2014]
10%

8%

6%
4%
2%
0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fixed voice

Fixed broadband

IPTV

ASPU (ZAR per month)

Figure 54: Fixed ASPU rates by service type, South Africa, 20092018
[Source: Analysys Mason, 2014]
500

South Africa has the highest population penetration of fixed


services in the region: fixed broadband penetration stood at
2% and fixed voice at 7% in 2013.
We forecast that fixed voice connections will continue to
decline, driven by fixedmobile substitution to lower-priced
mobile services. However, decline will be slower during the
forecast period (at a CAGR of 1.4%) than it has been in
recent years because incumbent operator Telkom has locked
established consumers into long-term contracts.
Fixed broadband connections will grow at a CAGR of 10.1%,
driven by growing competition in the fixed broadband market.
The planned merger between Neotel (the second national
fixed operator) and Vodacom (the leading mobile operator)
should spur competition and market development.
In December 2013, the cabinet approved an ambitious
national broadband policy, strategy and plan referred to as
South Africa Connect. The plan aims to position South
Africa as a broadband leader and to ensure that all South
Africans have basic broadband access by 2030 and that
50% have access to 100Mbps broadband speeds by 2020.

400

300
200
100
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fixed voice ASPU

Analysys Mason Limited 2014

Fixed broadband ASPU

Significant investment in FTTC is required for the targets


to be realised. Telkom is investing in VDSL technologies
and FTTx services, as is Neotel.

46

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Sudan: Telecoms revenue will reach SDG7.1 billion (USD2.1 billion),


as mobile data grows but mobile voice remains predominant
Figure 55: Telecoms retail revenue by service type and total service revenue
(retail and wholesale), Sudan, 20092018 [Source: Analysys Mason, 2014]

Revenue (SDG billion)


CAGR
2013
2018 20092013 20132018
Mobile voice
3798.3
3825.4
6.8%
0.1%
Mobile messaging
285.8
317.8
21.1%
2.1%
Mobile handset data
407.4
1303.3
126.8%
26.2%
Mobile broadband1
57.9
96.2
27.3%
10.7%
Mobile M2M
0.000
70.834
N/a
N/a
2
Fixed voice and narrowband
140.4
79.2
11.3%
10.8%
Fixed broadband and IPTV
132.4
174.0
21.5%
5.6%
Business network services
90.9
90.7
19.3%
0.1%
Total retail revenue
4913.1
5957.4
9.4%
3.9%
Total service revenue3
6252.7
7101.0
10.9%
2.6%

8000

Service type

7000

Revenue (SDG million)

Figure 56: Telecoms retail revenue by service type, total service revenue and
growth rates, Sudan, 20132018 [Source: Analysys Mason, 2014]

6000
5000
4000
3000

2000

1
2

1000

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

Includes USB modem, and mid- and large-screen, but not handset-based data.
Includes narrowband, VoBB and dial-up Internet access.
Includes retail and wholesale revenue.

Figure 57: Connections by type, and growth rates, Sudan, 20132018


[Source: Analysys Mason, 2014]
Connection type

Mobile voice
Mobile M2M
Mobile messaging
Fixed voice and narrowband
Fixed broadband and IPTV
Mobile handset data
Business network services
Mobile broadband
Service revenue (retail and wholesale)
Analysys Mason Limited 2014

Mobile handsets
Mobile broadband
Mobile M2M
Fixed voice
Fixed broadband
IPTV
4 Not available.

Connections (million)
2013
2018
28.6
36.7
0.4
0.9
0.0
0.6
0.4
0.4
0.2
0.3
0.0
0.0

CAGR
20092013 20132018
16.1%
5.1%
24.2%
18.6%
N/a
N/a
5.1%
1.3%
22.6%
8.3%
N/a
N/a

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

47

Sudan: Key trends, drivers and assumptions


Figure 58: Summary of key drivers and assumptions, Sudan [Source: Analysys Mason, 2014]
Forecast trend (20132018)

Drivers and assumptions

Mobile retail revenue will grow


modestly, at a CAGR of 4.3%

Rising inflation, foreign exchange shortages and a devalued local currency in Sudan are impacting on the
operators ability to conduct business and negatively impacting on real (USD) mobile retail revenue.

Handset data revenue will


experience solid growth, at a CAGR
of 26.2%

Fixed broadband connections will


grow despite low investment and
high prices, at an 8.3% CAGR

Analysys Mason Limited 2014

We forecast that mobile retail revenue will grow modestly at a CAGR of 4.3% during 20132018.

3G services are provided by all three operators: MTN, Sudatel and Zain. This, together with the lack of
competition in the fixed broadband market and the high cost of fixed broadband tariffs, is boosting mobile
handset data use.
Handset data revenue will grow at a 26.2% CAGR during 20132018.
The fixed broadband market is underdeveloped and suffers from low investment. There are two main
fixed broadband providers, incumbent Sudatel and Canar Telecom, which have managed to keep fixed
broadband prices high.
The planned exit of Canar Telecom is likely to threaten market growth, but this will depend on the
operators ability to find a buyer.
We forecast that growth in fixed broadband connections will be at a CAGR of 8.3% during 20132018,
which still means the 2018 connection figure will be under 350 000 well below the number of mobile
broadband and 3G connections.

48

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Sudan mobile: Negative macroeconomic conditions in Sudan


may threaten future growth of the mobile market
Percentage of the
population, handsets
or SIMs

Figure 59: Mobile, smartphone and 4G penetration rates, Sudan, 20092018


[Source: Analysys Mason, 2014]
100%

80%
60%

The Sudanese pound was devalued by 35% against the


US dollar in 2013.

40%
20%
0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Mobile penetration of population:


Smartphone share of handsets

Including M2M

Excluding M2M

4G share of SIMs (excluding M2M)

ARPU (SDG per month)

Figure 60: ARPU rates by type, Sudan, 20092018 [Source: Analysys


Mason, 2014]

25
20
15
10
5
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Mobile ARPU

Handset ARPU

Handset data ARPU

Mobile ARPU is calculated as total mobile service revenue (retail and wholesale), excluding
M2M, divided by total average mobile connections, excluding M2M.

Analysys Mason Limited 2014

Sudans mobile market continues to grow. SIM penetration


(excluding M2M) stood at 78% in 2013. The demand drivers
are similar to those in other SSA markets. However, negative
macroeconomic conditions that prevailed in 2013 are likely to
inhibit growth.

Inflation is high and there are foreign currency shortages.


The potential entry of MVNOs may drive dynamism in the
mobile market, but this prospect is likely to be affected by
the macroeconomic situation.
Growth in handset penetration will accelerate in the next
5 years. The rate will increase from 77% in 2013 to 87% in
2018. Mobile handset connections will increase at a 5.1%
CAGR during the forecast period. Prepaid services will
account for most of the growth, and MVNOs could play an
important role in this market.
Smartphones will account for 9% of handsets in 2018 and will
drive handset data usage and spending. We forecast solid
handset data ARPU growth at a 19.9% CAGR during 2013
2018.
Overall mobile ARPU will decline at a 2.7% CAGR during
the forecast period.

49

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Sudan fixed: The fixed broadband market lacks competition and


Canar Telecom is planning to exit the market

Percentage
of the population

Figure 61: Fixed penetration rates by service type, Sudan, 20092018


[Source: Analysys Mason, 2014]
1.4%

1.2%
1.0%

0.8%
0.6%
0.4%

0.2%
0.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fixed voice

Fixed broadband

IPTV

ASPU (SDG per month)

Figure 62: Fixed ASPU rates by service type, Sudan, 20092018 [Source:
Analysys Mason, 2014]
80
70
60
50
40
30
20
10
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Fixed voice ASPU

Analysys Mason Limited 2014

Fixed broadband ASPU

Sudans fixed market lacks competition and suffers from low


investment. Service penetration rates stood at 1.2% of the
population (5.5% of households) for fixed voice and 0.5%
(7.7% of households) for fixed broadband in 2013. Fixed
voice connections will decline at a CAGR of 1.3% during
20132018. Fixed voice ARPU will decline strongly at a
CAGR of 6.9% and fixed voice revenue (excluding
narrowband) at 8.7%.
Fixed broadband connections will grow at a CAGR of 8.3%.
fixed wireless technology will account for 97% of fixed
broadband connections in 2018 because it is suitable for
the sparse population outside the main cities.
Canar Telecom and Sudatel have deployed national fibreoptic backbone networks, but end-user access to fibre
services is limited to large businesses and government
departments. We forecast that fibre will only represent 2%
of fixed broadband connections in 2018.
The macroeconomic conditions are also impacting on the
fixed-line market. In 2013, Etisalat, the majority owner of
Canar Telecom, announced that it plans to sell Canar
Telecom because it in the process of streamlining its
international operations and refocusing its attention on west
Africa. A buyer has not been identified to date.

50

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Tanzania: Service revenue will reach TZS3.4 trillion (USD2.1 billion)


in 2018, predominantly driven by mobile voice services
Figure 63: Telecoms retail revenue by service type and total service revenue
(retail and wholesale), Tanzania, 20092018 [Source: Analysys Mason,
2014]

Revenue (TZS billion)


CAGR
2013
2018 20092013 20132018
Mobile voice
1630.3
1916.3
18.7%
3.3%
Mobile messaging
273.9
325.7
23.8%
3.5%
Mobile handset data
272.3
730.5
175.8%
21.8%
Mobile broadband1
58.0
108.9
25.2%
13.4%
Mobile M2M
0.000
7.129
N/a
N/a
2
Fixed voice and narrowband
29.3
21.2
10.3%
6.3%
Fixed broadband and IPTV
14.5
23.1
10.5%
9.8%
Business network services
7.5
9.7
2.6%
5.1%
Total retail revenue
2285.8
3142.5
22.1%
6.6%
Total service revenue3
2550.4
3424.5
21.0%
6.1%

3500

Revenue (TZS billion)

Figure 64: Telecoms retail revenue by service type, total service revenue and
growth rates, Tanzania, 20132018 [Source: Analysys Mason, 2014]
Service type

3000
2500

2000
1500
1000

1
2

500

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

Includes USB modem, and mid- and large-screen, but not handset-based data.
Includes narrowband, VoBB and dial-up Internet access.
Includes retail and wholesale revenue.

Figure 65: Connections by type, and growth rates, Tanzania, 20132018


[Source: Analysys Mason, 2014]
Connection type

Mobile voice
Mobile M2M
Mobile messaging
Fixed voice and narrowband
Fixed broadband and IPTV
Mobile handset data
Business network services
Mobile broadband
Service revenue (retail and wholesale)
Analysys Mason Limited 2014

Mobile handsets
Mobile broadband
Mobile M2M
Fixed voice
Fixed broadband
IPTV
4 Not available.

Connections (million)
2013
2018
27.1
40.9
1.6
2.8
0.0
0.9
0.2
0.2
0.0
0.1
0.0
0.0

CAGR
20092013 20132018
11.6%
8.6%
42.7%
12.7%
N/a
N/a
1.0%
1.0%
16.3%
17.4%
N/a
N/a

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

51

Tanzania: Key trends, drivers and assumptions


Figure 66: Summary of key drivers and assumptions, Tanzania [Source: Analysys Mason, 2014]
Forecast trend (20132018)

Drivers and assumptions

Mobile penetration will accelerate


and reach 76% in 2018 but still lags
behind other sub-Saharan markets

We expect the mobile penetration rate to increase and reach 76% by 2018, up from 57% in 2013, but this still
lags behind other SSA markets.

Mobile voice revenue is expected to


grow modestly at a CAGR of 3.3%
in 20132018

LTE will remain a niche service


targeted towards high-end data
users and will only account for 2%
of mobile connections in 2018

Growth in fixed broadband


connections will be solid, at a
CAGR of 17.4%

Analysys Mason Limited 2014

Growth is likely to come from low-income segments as operators plan to improve coverage in rural areas.
However, the new 14.5% excise duty on telecoms services could slow operator expansion plans.
The TZS1000 (USD0.64) SIM tax could affect low-income users and reduce multiple-SIM ownership,
thereby slowing the growth rate in mobile SIMs.
High levels of competition are driving tariff reductions. We forecast that price per minute will decline at a
CAGR of 9.4%, resulting in a decline in mobile voice ARPU at a CAGR of 4.2% during 20132018.
We expect modest growth in mobile voice revenue at a CAGR of 3.3% during 20132018 and solid
growth in mobile voice traffic at a CAGR of 14% in 20132018.
Smile Tanzania launched 4G services in Dar es Salaam and Arusha in August 2012 and is the sole
provider of LTE services.

In January 2014 Smile started testing voice-over-LTE (VoLTE) over its network.
The LTE service is targeted towards high-end data users. We expect LTE to remain a niche ADSL
replacement service and account for 2% of mobile connections in 2018.
Faced with declining market share, the incumbent operator TTCL has reduced its DSL prices in
response to increased competition from BFWA operators. This is expected to stimulate competition and
spur further growth.

We forecast solid growth in fixed broadband connections at a CAGR of 17.4% during 20132018.

52

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Tanzania mobile: MTR cuts will put mobile ARPU under pressure;
growth in handset data ARPU will offset the decline in voice ARPU
Percentage of the
population, handsets
or SIMs

Figure 67: Mobile, smartphone and 4G penetration rates, Tanzania, 2009


2018 [Source: Analysys Mason, 2014]
80%
70%
60%
50%
40%
30%
20%
10%
0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Mobile penetration of population:
Smartphone share of handsets

Including M2M

Excluding M2M

4G share of SIMs (excluding M2M)

ARPU (TZS per month)

Figure 68: ARPU rates by type, Tanzania, 20092018 [Source: Analysys


Mason, 2014]
8000
7000
6000
5000
4000
3000
2000
1000
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Mobile ARPU
1

Handset ARPU

Handset data ARPU

Mobile ARPU is calculated as total mobile service revenue (retail and wholesale), excluding
M2M, divided by total average mobile connections, excluding M2M.

Analysys Mason Limited 2014

Mobile penetration (excluding M2M) is low in Tanzania at


57.4% in 2013, of which 54.3% is handsets and 3.1% is
mobile broadband. We forecast that handset penetration will
accelerate to reach 71% in 2018. Smartphones will account
for 6% of handsets in 2018.
The regulatory impact of SIM registration led to Vodacom
and Airtel jointly disconnecting 650 000 subscribers in July
2013, which had a minor impact on growth in 2013.
Tanzania has one of the highest tax rates in the region,
with 18% VAT on airtime. Following the increase of excise
duty on airtime to 12% in July 2013, the indirect tax on
airtime is now more than 30%.
The increase in excise duties on telecoms services to
14.5% in July 2013 will impact mobile operators and
mobile services costs, and may constrain operator
expansion plans into rural areas.
Mobile voice ARPU will decline at a 4.2% CAGR. Price
competition is intensifying. Small players such as Zantel have
gained scale through price reductions, which prompted Airtel,
Tigo and Vodacom to reduce tariffs in 1Q 2014.
Handset data ARPU will grow at a CAGR of 13%, which will
offset the decline in voice ARPU.

53

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Tanzania fixed: Government investment in a national broadband


network is expected to stimulate growth of fixed broadband

Percentage
of the population

Figure 69: Fixed penetration rates by service type, Tanzania, 20092018


[Source: Analysys Mason, 2014]
0.4%

The fixed voice market will experience a modest decline at a


CAGR of 1.0% during 20132018. The governments
support for investment in fixed wireless access to extend
access of fixed voice to the underserved rural areas will aid
market growth in subscribers.

0.3%
0.2%

0.1%
0.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fixed voice

Fixed broadband

IPTV

Figure 70: Fixed ASPU rates by service type, Tanzania, 20092018 [Source:
Analysys Mason, 2014]
60000

ASPU (TZS per month)

Fixed penetration is extremely low in Tanzania, at 0.3% of


population for voice (1.7% of households) and 0.1% for
broadband (0.4% of households) in 2013.

50000
40000

Tanzania suffers from poor fixed infrastructure. The


government has undertaken measures to remedy the
situation by deploying a National ICT Broadband Backbone
(NICTBB). The government also awarded a tender to the
fixed line incumbent TTCL in 2014 to extend access in rural
and underserved areas via a universal service fund.

We forecast that BFWA will account for 39% of fixed


broadband connections by 2018.
More than 30 Internet access providers serve the fixed
broadband market and offer an alternative to ADSL, mainly
fixed wireless access through WiMAX.

30000
20000
10000
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fixed voice ASPU

Analysys Mason Limited 2014

Fixed broadband ASPU

With more capacity, a larger network and lower broadband


pricing, we forecast that fixed broadband connections will
grow at a 17.4% CAGR during 20132018, generating
TZS23.1 million in revenue at a CAGR of 9.8%.

54

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Uganda: Mobile handset data and fixed broadband will drive


service revenue to UGX3.8 trillion (USD1.6 billion) by 2018
Figure 71: Telecoms retail revenue by service type and total service revenue
(retail and wholesale), Uganda, 20092018 [Source: Analysys Mason, 2014]

Revenue (UGX billion)


CAGR
2013
2018 20092013 20132018
Mobile voice
1512.6
1910.4
8.4%
4.8%
Mobile messaging
41.0
37.5
4.0%
1.8%
Mobile handset data
409.5
1156.5
111.2%
23.1%
Mobile broadband1
36.2
70.2
42.9%
14.2%
Mobile M2M
0.399
42.565
N/a
154.5%
Fixed voice and narrowband2
22.6
13.5
7.0%
9.8%
Fixed broadband and IPTV
52.9
79.8
41.9%
8.6%
Business network services
6.7
8.5
12.0%
4.7%
Total retail revenue
2082.0
3318.9
14.6%
9.8%
Total service revenue3
2495.2
3835.8
13.4%
9.0%

4000

Service type

3500

Revenue (UGX billion)

Figure 72: Telecoms retail revenue by service type, total service revenue and
growth rates, Uganda, 20132018 [Source: Analysys Mason, 2014]

3000
2500
2000
1500

1000

1
2

500

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

Includes USB modem, and mid- and large-screen, but not handset-based data.
Includes narrowband, VoBB and dial-up Internet access.
Includes retail and wholesale revenue.

Figure 73: Connections by type, and growth rates, Uganda, 20132018


[Source: Analysys Mason, 2014]
Connection type

Mobile voice
Mobile M2M
Mobile messaging
Fixed voice and narrowband
Fixed broadband and IPTV
Mobile handset data
Business network services
Mobile broadband
Service revenue (retail and wholesale)
Analysys Mason Limited 2014

Mobile handsets
Mobile broadband
Mobile M2M
Fixed voice
Fixed broadband
IPTV
4 Not available.

Connections (million)
2013
2018
17.8
29.5
0.4
1.0
0.0
0.6
0.3
0.2
0.1
0.2
0.0
0.0

CAGR
20092013 20132018
17.6%
10.6%
47.7%
20.6%
N/a
148.2%
2.1%
2.8%
39.8%
12.0%
N/a
N/a

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

55

Uganda: Key trends, drivers and assumptions


Figure 74: Summary of key drivers and assumptions, Uganda [Source: Analysys Mason, 2014]
Forecast trend (20132018)

Drivers and assumptions

Penetration in Uganda is expected


to significantly lag behind other
SSA markets despite an increase in
competition, reaching 67% in 2018

The competitive landscape in Uganda has changed following the merger between Airtel Uganda and
Warid Uganda in May 2013, which led to Airtel Uganda gaining 13 percentage points in terms of market
share of mobile SIMs.

In January 2014 Orange Uganda announced that it was looking to exit the market. South Africa-based
companies MTN and Vodacom have expressed interest in buying Oranges stake in Uganda.

We expect more market dynamism in the next few years and prices are expected to decline, resulting in
higher penetration levels.
We forecast that mobile penetration will reach 67% in 2018 up from 48% in 2013. However, this
significantly lags behind other SSA markets.

LTE take-up will be slow and only


account for 2% of mobile
connections in 2018

Consolidation among FWA


operators and increased
competition will drive growth in the
fixed broadband market, at a CAGR
of 12%

Analysys Mason Limited 2014

MTN, Smile and Orange launched commercial LTE services in Kampala in 2013.

LTE is expected to remain a niche service targeted towards corporate and high-end residential
customers.
We forecast that take-up of LTE will be slow because average incomes are low. LTE will account for 2%
of mobile connections in 2018.
Fixed wireless will continue to dominate the fixed broadband market, because the copper infrastructure
is limited.
We expect market consolidation among FWA operators and increased price competition, which will
stimulate growth.
We forecast that fixed broadband connections will reach 167 068 at a CAGR of 12% during 20132018,
of which 87% will be BFWA connections, 10% DSL connections and 3% FTTx connections.

56

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Uganda mobile: Competition is set to intensify as operators


consolidate
Percentage of the
population, handsets
or SIMs

Figure 75: Mobile, smartphone and 4G penetration rates, Uganda, 2009


2018 [Source: Analysys Mason, 2014]
70%
60%
50%
40%
30%
20%
10%
0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Mobile penetration of population:
Smartphone share of handsets

Including M2M

Excluding M2M

4G share of SIMs (excluding M2M)

ARPU (UGX per month)

Figure 76: ARPU rates by type, Uganda, 20092018 [Source: Analysys


Mason, 2014]
14000
12000
10000
8000
6000
4000
2000
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Mobile ARPU
1

Handset ARPU

Handset data ARPU

Mobile ARPU is calculated as total mobile service revenue (retail and wholesale), excluding
M2M, divided by total average mobile connections, excluding M2M.

Analysys Mason Limited 2014

Mobile penetration (excluding M2M) is low in Uganda (47.5%


in 2013, of which 46.5% is handset and 1.0% mobile
broadband). The mobile market in Uganda stagnated after a
period of strong growth in 2013. At the end of the registration
period in August 2013, MTN claimed to have disconnected
325 000 active SIMs and Airtel claimed it had disconnected
more than 300 000.
However, several factors will drive higher dynamism in the
market in the forecast period.
Airtel Ugandas acquisition of Warid Uganda in May 2013
will increase competition.
The planned launch of an unnamed operator in 2014 and
the planned exit of Orange Uganda is expected to change
the market dynamics.
These factors will have the following effects on the market.
Handset penetration will reach 65% in 2018 and handset
data ARPU will grow at a CAGR of 11.2%. Smartphones
will account for 10% of handsets in 2018.
Mobile voice ARPU will decline at a 5.4% CAGR during
20132018 because of intense price competition.

57

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Uganda fixed: Mobile services are preferable to fixed because


they offer wider coverage at a lower cost

Percentage
of the population

Figure 77: Fixed penetration rates by service type, Uganda, 20092018


[Source: Analysys Mason, 2014]
1.4%

1.2%
1.0%

0.8%
0.6%
0.4%

0.2%
0.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fixed voice

Fixed broadband

IPTV

ASPU (UGX per month)

Figure 78: Fixed ASPU rates by service type, Uganda, 20092018 [Source:
Analysys Mason, 2014]
60000

50000
40000
30000
20000
10000
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fixed voice ASPU

Analysys Mason Limited 2014

Fixed broadband ASPU

Ugandas fixed line market is underdeveloped. Fixed voice


penetration is extremely low, at 0.7% of population for voice
(3% of households) and 0.2% for broadband (1.1% of
households) in 2013.
We forecast that fixed voice connections will decline at a
CAGR of 2.8% in 20132018. Uganda Telecom and MTN
Ugandas fixed service prices are high and cannot compete
with the lower cost and wide coverage that mobile services
offer.
We forecast growth in fixed broadband connections at a 12%
CAGR during 20132018. Fixed wireless access dominates
the fixed broadband market, while DSL access is declining.
Uganda Telecoms fixed infrastructure is in a dismal state
and the companys DSL coverage is limited. The company
has been experiencing financial difficulties, resulting in the
failure to pay interconnection fees, and is facing nonpayment lawsuits from vendors Huawei and ZTE.
We expect some consolidation in the fixed market, which
is characterised by a number of small WiMAX operators.
Price competition is expected to intensify in an effort to
attract customers.

Sub-Saharan Africa telecoms market: trends and forecasts 20132018

Executive summary
Regional forecasts and cross-country comparison
Individual country forecasts
About the authors and Analysys Mason

Analysys Mason Limited 2014

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About the authors


Mpho Moyo (Analyst) is an Analyst for our The Middle East and Africa regional research programme, and her work
focuses on Sub-Saharan Africa markets. Her primary areas of specialisation include telecoms market
developments, mobile money, operator strategies, regulation, policy and pricing analysis. Prior to joining Analysys
Mason, Mpho was a researcher at Research ICT Africa, where she co-authored reports on next-generation
backbone infrastructure, universal access strategies, telecoms sector performance in South Africa and comparative
telecoms reports in 16 African countries. Earlier in her career, she worked as Research Analyst at Frost & Sullivan.
Mpho holds a Masters degree in Social Science (International Relations) from the University of Cape Town; an
Honours degree in International Relations from the University of Cape Town and a Bachelor of Social Science in
Politics, Philosophy and Economics from the University of Cape Town.

William Hare (Analyst) is the leader of Analysys Masons Telecoms Market Matrix research programme, which
tracks and compares telecoms metrics and market shares for all the major fixed and mobile operators in Europe. He
joined Analysys Mason's Consulting division in 2007, before transferring to the Research division in 2010. William's
primary specialisations include business and market modelling and data analysis, for both the mobile and fixed
telecoms markets. He read mathematics at the University of Cambridge.
Alexandra Rehak (Partner, Head of Regional Markets Research) is the head of Analysys Masons Regional
Markets research practice. She previously served as Research Director of Analysys Masons Custom Research
group, where she developed and directed client-specific projects on market, competitive and regulatory issues for a
variety of clients including service providers, vendors and regulators. Alexandras primary areas of specialisation
include media and entertainment, mobile telecoms services for both consumer and enterprise markets, best practice
and competitive strategy, and benchmarking. Before joining Analysys Mason, Alexandra was Director of Advisory
Services at the international telecoms research firm TeleGeography. Her other previous experience includes
management roles in Motorolas Business Research and Strategy group in Asia, in the telecoms/media/technology
division of PA Consulting Group, and as Director, AsiaPacific region for Pyramid Research.

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About Analysys Mason


Knowing whats going on is one thing. Understanding how to take advantage of events is quite another. Our ability to understand the
complex workings of telecoms, media and technology (TMT) industries and draw practical conclusions, based on the specialist
knowledge of our people, is what sets Analysys Mason apart. We deliver our key services via two channels: consulting and research.

Consulting
Our focus is exclusively on TMT.
We support multi-billion dollar investments, advise clients on
regulatory matters, provide spectrum valuation and auction support,
and advise on operational performance, business planning and strategy.
We have developed rigorous methodologies that deliver tangible
results for clients around the world.
For more information, please visit www.analysysmason.com/consulting.

Research
We analyse, track and forecast the different services accessed by
consumers and enterprises, as well as the software, infrastructure
and technology delivering those services.
Research clients benefit from regular and timely intelligence in
addition to direct access to our team of expert analysts.
Our dedicated Custom Research team undertakes specialised and
bespoke projects for clients.
For more information, please visit www.analysysmason.com/research.
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Research from Analysys Mason


We provide dedicated coverage of developments in the telecoms, media and technology (TMT) sectors,
through a range of research programmes that focus on different services and regions of the world.

Alongside our standardised suite of research programmes, our Custom Research team undertakes specialised, bespoke research
projects for clients. The dedicated team offers tailored investigations and answers complex questions on markets, competitors and
services with customised industry intelligence and insights.
To find out more, please visit www.analysysmason.com/research.
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Consulting from Analysys Mason


For more than 25 years, our consultants have
been bringing the benefits of applied intelligence
to enable clients around the world to make
the most of their opportunities.
Our clients in the telecoms, media and technology (TMT)
sectors operate in dynamic markets where change is
constant. We help shape their understanding of the future
so they can thrive in these demanding conditions. To do
that, we have developed rigorous methodologies that
deliver real results for clients around the world.
Our focus is exclusively on TMT. We advise clients on
regulatory matters, help shape spectrum policy and
develop spectrum strategy, support multi-billion dollar
investments, advise on operational performance and
develop new business strategies. Such projects result in a
depth of knowledge and a range of expertise that sets us
apart.
We help clients solve their most pressing problems,
enabling them to go farther, faster and achieve their
commercial objectives.
To find out more, please visit
www.analysysmason.com/consulting.
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