NewsNorth AfricaTop telecoms companies: Talk is cheap, but data leads the way


Posted on Friday, 04 March 2016 11:56

Top telecoms companies: Talk is cheap, but data leads the way

By Oheneba Ama Nti Osei

Submarine cables linking the continents revolutionise broadband speeds. Photo©AFPIn the face of falling revenue, companies are rolling out infrastructure to encourage internet use and greater smartphone take-up.

The past few years have been tough for the telecoms sector due to fierce competition on price. Turnover for the 45 telecoms and information and communications companies included in this year's Top 500 fell by 3.71% from $73.4bn in 2013 to $70.6bn in 2014. Eight of the top 10 companies recorded a drop in turnover over the same period, with South African firms in particular hit by falling revenue after the government mandated lower mobile interconnection rates.

If 2015 was grim, executives from Africa's largest telecoms company, MTN Group (#6), hope this year to see more blue sky. In October 2015, the Nigerian government fined MTN Nigeria (#27), the group's largest unit, a record $5.2bn – later reduced to $3.9bn – for failure to deactivate 5.2m unregistered SIM cards from its network. The operator lost almost 20% off its market capitalisation in less than a week following the announcement.

MTN missed the 31 December 2015 deadline to pay the fine, and the case is currently in the courts. The group is also facing more troubles in Uganda, where MTN Uganda (#309) is appealing a $660,000 fine imposed by a Ugandan commercial court in relation to its partnership with mobile- money business EzeeMoney.

Undeterred by its troubles elsewhere, the group paid a total of $196m for licences in Côte d'Ivoire and Ghana in December and concluded a deal to acquire Visafone Communications this January. The purchase of Visafone and its rights on the 800MHz spectrum will not only help accelerate MTN's launch of 4G LTE services but also increase its subscriber base by two million subscribers.

Surfing by phone

Mobile internet remains the key platform for internet access and video streaming across the region, with about a fifth of sub-Saharan Africa's population using a mobile internet connection by the end of 2014, according to the industry body the GSM Association.

This has translated into a surge in data revenue for mobile operators, and the association expects it to rise from $40bn in 2015 to $51bn in 2020. Interim results for Vodacom South Africa (#21) for the six months ending 30 September 2015 showed annual 33.4% growth in data revenue, and Telkom (#49) announced in November that it had increased mobile data revenue by 68.5% to R711m ($47m) over the same period.

Vodacom is in talks with South Africa-based Naspers (#16) – Africa's largest pay-TV provider – to deliver video content to mobile phones across Africa. The smartphone market is in- creasing in volume due to falling device prices and more than 540m devices are expected to be in use by 2020, up from 160m in 2015. Econet Wireless Global, parent company of Zimbabwe's Econet Wireless (#192), also plans to launch a pay-TV service this year for Anglophone Africa.

New infrastructure

Twenty-four African countries had 4G LTE services by mid-2015, and 103 operators announced new 4G projects in 35 countries, according to a report from London-based consultancy Balancing Act. In North Africa, 4G deployment has been slower. None of Egypt's three mobile operators – MobiNil (#100), Vodafone and Etisalat – are yet to offer the service. Morocco is a step ahead, with all three major op- erators including Maroc Telecom (#67), offering 4G as of July 2015.

Companies are continuing to roll out new infrastructure. UK-based Liquid Telecom, a broad-band group controlled by Econet Wireless, issued a request for tenders late last year for a 10,000km submarine cable that will link South Africa to the Middle East and Europe.

The cable will be connected to Liquid Telecom's existing 20,000km terrestrial fibre network – the largest in the re- gion – to extend international connectivity to landlocked and coastal countries in Eastern, Central and Southern Africa. Indian company Bharti Airtel signed a deal with Liquid Telecom in September to use its fibre infrastructure to provide faster broadband services to its customers in Africa. The telecoms giant has four of its African subsidiaries in our top 500 list: Airtel Nigeria (#126), Airtel DRC (#386), Airtel Tanzania (#443) and Airtel Uganda (#489).

In October Etisalat, a United Arab Emirates-based telecom operator, completed the sale of its 85% stake in Zanzibar Telecom to Sweden-based Millicom after acquiring a 53% majority stake in Maroc Telecom in May. The deal made Millicom, which owns Tigo Tanzania (#373), the number-two mobile operator in the East African country, with control of more than a third of the country's mobile customers (see box). ●

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