Mobile operators to invest $50bn in Sub-Saharan Africa

A group of mobile operators announced a substantial investment drive in the continent’s sub-Saharan region on Monday. The GSM Association revealed that a group of carriers including MTN, Orange, Vodacom and Kuwaiti carrier Zain are to plough more than $50bn into the region over the next five years in a bid to extend mobile coverage to more than 90 per cent of the area’s population. The project will focus on pushing 2.5 and 3G services into the region, boosting internet access as well as voice and messaging coverage.

“We have the passion and dedication to provide Africa with a world class infrastructure,” said MTN Group President and CEO Phuthuma Nhleko. “We are proud to be a leading investor in Africa, bringing world-class services to our customers on the continent through our Celtel subsidiary,” added Dr. Saad Al Barrak, CEO of the Zain Group, while Alan Knott-Craig, CEO of Vodacom Group, said: “We are proud of our investment in Africa, and we will continue to focus on our customers and the development of products and services that benefit them.”

The investment plan will not be concentrated solely on extending coverage, as there are as many as 350 million sub-Saharan Africans who are within coverage but who are not yet connected. The carriers will continue to exploit economies of scale to connect this group of people, they pledged.

The GSMA has long campaigned for regulatory relaxation in developing markets, which it believes is essential to using telecommunications to nurture economic growth. The organisation backed the opinions of Paul Kagame, President of Rwanda, the host nation of Connect Africa.

“The barriers that governments put in the path of entrepreneurs need to be urgently removed,” said Kagame. “Individuals and companies create wealth, not governments. This is not to say that the state should become invisible. But governments should see their roles as enablers of business, and not gatekeepers that control and hamper it,” he said.

The GSMA is lobbying African governments on spectrum allocation, on which it is keen that they should harmonise with other, more developed markets. “The world’s governments have an opportunity to narrow the digital divide between those who enjoy high-speed access to multimedia services today and the many people who can’t yet be economically served by broadband networks,” said Tom Phillips, chief government and regulatory affairs officer of the GSMA. “It is important that the world’s governments set aside this spectrum in a harmonised way, enabling handset makers to achieve economies of scale, thereby reducing the cost of access devices for consumers.”

Devine Kofiloto, principal analyst at Informa Telecoms & Media, commented: “Of vital importance with this aggressive network expansion in the coming years will be the need to do it cost effectively, as it will entail an increase in operating expenses. Coverage extension will primarily be into rural and semi-rural areas where consumption and spending patterns are different given the lower affordability level within these segment markets. With ARPU trending lower as the subscription base expands, cost managment becomes critical in managing this growth profitably.”