African mobile operators should move to rural markets and look at outsourcing

Thanks to increased growth in the African telecom markets, competition has
intensified. The market is nearing saturation and margins are increasingly
coming under pressure.


As a result, CEOs have to start considering rejecting
strategies aimed at subscriber acquisition. They need to consider outsourcing
as a core strategy, adopt surgical network deployments and develop data
strategies for low-cost models, according to Frost & Sullivan.



According to Frost & Sullivan, the telecom market in Sub-Saharan Africa
earned revenues of $50 billion in 2009 and estimates this to reach $88.1
billion in 2016.


The key drivers for growth for the telecommunications sector include
exponential growth in wireless technologies and services,” said Birgitta
Cederstrom, ICT Business Unit Leader for Africa at Frost & Sullivan.


Growing demand for broadband and data services,
especially by the enterprise sector, intensifying competition and mass market
targeted strategies will define the market landscape,” Birgitta added.


Wireless technology has become the primary mode of communication in Africa and
continues to enjoy double-digit growth. This accelerated growth has attracted
new participants into the market, with the resulting competition compelling
operators to become more creative in their product offerings.


Mobile money is the main offering for mobile providers while end-to-end
connectivity and communication services have become important differentiators
in the internet services market. Fixed mobile convergence will be a key future
differentiator in both the mobile and fixed line service segments.


Enterprise data services have emerged as a key cash cow for telecoms providers.
Allied to this trend has been the increased focus to service this market.


Many challenges still confront market participants. For instance, the low level
of foreign direct investment is leading to the slow development of the
broadband market in the region. Low disposable income levels, paralleled by the
high cost of computers, are limiting consumer demand for broadband services.


The market continues to be hampered by intensifying competition and near
saturation, as operators remain hesitant to expand into rural areas. At the
same time, the cost of doing business in Sub Saharan Africa has risen notably
and is likely to increase further with rural expansion. Furthermore, device
penetration and affordability remains low, and infrastructure shortages remain
a key hindrance for sound network and service rollout.


Rural expansion has become critical for operator strategies, as this market
presents the largest growth potential and helps operators address the issues of
urban market saturation. Outsourcing, shared services and infrastructure
sharing are also key in protecting margins, as operating costs continue to
soar. Fixed mobile differentiation is a strategic response that both mobile and
fixed line operators continue to explore, albeit slowly.


By Team