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Oct 16, 2012

Africa telecoms enter high-growth phase - PwC

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Africa|Education|PricewaterhouseCoopers|Testing|Africa|USD|Advisory Services|Communications Market|Finance Industry|Mass-market Mobile Networks|Services|Telecommunications|Telecommunications Capital|Elmo Hildebrand|Johan Van Huyssteen|Southern Africa
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Africa’s telecommunications sector has passed the tipping point from high potential to high growth, a new report by professional services firm PricewaterhouseCoopers (PwC) found on Tuesday.

In the inaugural ‘Communications review, telecoms in Africa: innovating and Inspiring’, PwC communications leader for Southern Africa Johan van Huyssteen said the continent, which surpassed the fixed-line development phase in favour of mass-market mobile networks and services, remained an untapped market, despite a mobile subscription base of more than 500-million.

“With billions of dollars of international investment flowing in and subscriber numbers rising across the continent, Africa’s communications market is at the inflection point where high potential starts to turn into high growth,” he said, noting that a 10% increase in mobile penetration equated to a 0.6% rise in a country's economic growth rate.

The mobile sector, which would account for 68.9%, or $100.1-billion, of Africa’s expected cumulative $145-billion telecommunications capital spend by 2015, would drive the growth, said Van Huyssteen.

Fixed-line penetration on the continent remained below 10%, with no indications of growth, while the mobile market continued to experience a rapid uptake of subscriptions, rising from 16-million in 2000, to 500-million in 2012.

The continent was also a “global testing lab” with the emergence of innovative digital- and mobile-enabled applications for the finance industry, citing the success of mobile money payment in Africa, as well as the commerce, health and education sectors.

However, PwC associate director for advisory services Elmo Hildebrand warned that mobile operators should assess and improve their current network performance before implementing and upgrading networks for newer technologies.

He noted that the aggressive build of a 2G network, for instance, could have left “stranded assets” hampering the network capacity and processes.

Further, the knowledge of the inefficiencies in a network enabled the operators to align future network developments with the existing network, as well as improve network performance and lower operational costs.

Assessment of the networks could improve performance by 20%, while reducing capital expenditure by between 5% and 30% in the first year, with similar operational expenditure reductions.

“Operators that take stock of their networks at the end of the 2G phase, and before they roll out the next technology, tend to perform better because knowing more about their existing network helps them make the necessary changes faster for a 3G roll-out,” said Hildebrand.

 

Edited by: Mariaan Webb
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