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Harare – Technology experts say the telecommunications market in Africa will be dominated by mergers and acquisitions, infrastructure sharing and market liberalisation in the next four years, while new investors will increasingly foray into the region.
By the end of 2013, the telecommunications penetration rate on the continent had reached above 70%. Mobile connectivity largely accounted for the increased connectivity although fixed communication accounted for a lowly 3.4% of the total penetration rate for the African telecoms industry.
Naila Govan-Vassen, the information and communication technology (ICT) industry analyst at research and advisory group, Frost and Sullivan said on Wednesday that "communication markets (in Africa) will become more liberal, especially in countries where governments understand the correlation between ICT development and economic growth".
This will drive up infrastructure sharing agreements, which are expected to take place "as a measure to bring down investment costs" and increase expansion and growth of coverage.
Operators are likely to share more on infrastructure such as base station towers and cabling for fibre connectivity, other industry players said.
Telecommunications infrastructure sharing has previously been problematic in most markets across the region, with operators viewing infrastructure as a competitive advantage, forcing regulators in countries such as Zimbabwe to move in and enforce sharing.
“New market entrants will emerge in Africa, which will either tap into unexplored markets -for example, the case of Movitel in Mozambique - or strategically acquire a company. The mergers and acquisitions are taking place between and within MNOs, state owned operators, system integrators and managed services,” said Govan-Vassen.
South Africa is expected to lead the African M&A activity scene, with deals involving Vodacom and Neotel, Telkom and BCX and MTN and the Telkom infrastructure sharing strategy likely to be finalised in the near future.
Investment in backbone infrastructure for fibre optic internet connectivity is also likely to strengthen in the next four years, said Frost and Sullivan.
“Investments on the backhaul to last mile infrastructure will begin to increase. Even land locked countries (such as Uganda, Rwanda and Botswana) are beginning to benefit from the submarine cables and are decreasing their dependency on the satellites.”
Other areas that are likely to dominate telecommunications activity on the continent upto 2018 include the rapid growth and development of mobile banking and payment platforms.
Govan-Vassen said mobile network operators will increasingly integrate their operations with other sectors to come up with solutions aimed at tapping into e-education, e-health, e-agriculture, e-governance and other such initiatives.
Although other areas of the African telecommunications market are expected to largely rapidly develop and witness the entry of new players, the fixed phone sub-sector remains subdued from full development.
Most of the markets on the African continent have only one state owned fixed line operator. However only a few countries such as Tanzania, Ghana and South Africa are the few exceptions to this as they all have two fixed operators.
The resultant “lack of competition within the fixed line market has resulted in little motivation to improve services,” said Frost and Sullivan. This was forcing subscribers to choose to communicate through mobile devices rather than fixed line modes.
