Telecoms industry to surge in Ethiopia, DRCComment on this story
Tawanda Karombo Harare
THE growing integration of telecoms and financial services and the increased uptake and usage of data-enabled platforms is expected to spur economies across Africa.
In a report released on Wednesday, research firm Frost & Sullivan said Ethiopia and the Democratic Republic of Congo (DRC) stood to benefit greatly from such platforms.
Cellphone uptake in the two countries has continued to lag others in sub-Saharan Africa, where the average penetration rate is 61 percent. Uptake in countries such as Botswana, Kenya and South Africa has grown briskly in recent years. Ethiopia has 36.4 connections per 100 people, and the rate in the DRC is 24.1 percent.
Helios Towers Africa, an independent cellular tower firm that focuses on the region, said this week that “growth drivers underpinning the telecoms towers industry continue to be robust” as Africa “needs 100 000 points of service to merely satisfy demand for second-generation (2G) coverage and associated capacity demand” over the next five years.
This demand was underpinned by the growing use of 3G and 4G data transmission services in some parts of the continent, which was “driving the need for significant additional infrastructure capacity”.
Data and mobile money services are areas seen as presenting immense growth opportunities for telecoms companies. Operators in Zimbabwe are significantly shifting attention to instituting new innovations such as credit cards that enable mobile money users to withdraw money from their e-wallets at ATMs.
“Mobile money has been struggling to make a mark in the retail sector,” Nkosinathi Ncube of Telecel Zimbabwe said when it launched its credit card for the Telecash mobile money platform.
Telecel Zimbabwe and rival operator Econet Wireless, which runs the EcoCash mobile money platform, have launched data bundles for social media platforms such as Facebook and WhatsApp that cost $1 (R10.53) a week for unlimited access. Such innovations have been necessitated by the expected drop in revenue from traditional voice calls.
Ethiopia and the DRC have been projected to leverage off similar platforms. The growing investment in network expansion by existing operators and the potential opening up of the telecoms sector to new players are seen as major growth enablers, say experts.
“Mobile operators will need to consider more cost-effective network expansion strategies in the DRC in order to grow their customer base, especially in the rural areas,” said Frost & Sullivan information and communications technology analyst Lehlohonolo Mokenela .
Telecoms infrastructure sharing, which has been problematic in some African countries as it is still viewed as a competitive advantage, is expected to help operators in the two countries “to lower their operational costs”.
Frost & Sullivan said the low mobile penetration rates in Ethiopia and the DRC meant the two nations had immense opportunities for growth.
In 2013, revenue from the telecoms sectors in Ethiopia and the DRC topped $1.78 billion. This is expected to nearly double to $3.27bn by 2018.
“Data revenue will be driven by the increasing number of low-cost mobile devices in the market and the growing popularity of social media platforms. Mobile money will grow in prominence as the number of people in Ethiopia and DRC who don’t have bank accounts have prompted their respective governments to place financial inclusion at the forefront of their socio-economic plans,” Mokenela said.
He added that growth in the Ethiopian telecoms market had been limited due to the lack of competition. State-owned Ethio Telecoms is the sole operator he said it and was set to enjoy “tight regulatory protection”.
However, it was now expected that the Ethiopian telecoms sector regulator “will gradually open up the market to competitors”.
Economists said telecoms industries had the potential to contribute more than 10 percent to the gross domestic products in African countries if opened up to more players.
“High poverty levels, low disposable incomes and limited infrastructure availability in both Ethiopia and the DRC have also contributed to the slow development of their mobile communications markets.”
Moreover, cellular operators in these markets have “largely focused on subscriber acquisition and network expansion for voice” services.
Countries including South Africa and Zimbabwe have already rolled out long-term evolution, a 4G technology for roaming high speed internet.