Executive SummaryAfrica’s cellular market is the fastest-growing in the world, gaining more than 50% in 2002, almost 40% in 2003 and more than 40% in the first three quarters of 2004 alone.
The fact that 20 African countries have achieved triple-digit compound annual growth rates (CAGR) for the period 1998-2003 shows that this phenomenal growth is not just short-lived.
It is primarily due to the small number and high cost of fixed-line connections, which seldom extend beyond the major urban centres.In early-2004, the last two countries on the continent, Guinea-Bissau and Eritrea, launched mobile services.
As early as 2001, Africa became the first continent as a whole where mobile phones outnumbered fixed telephone lines, which individually is the case in most African countries now.
Despite this, owning a mobile phone remains a luxury afforded by less than 8% of Africa’s 840 million people.
This compares to only 3% penetration of fixed-line telephony.The mobile market is open to competition in the majority of the countries, featuring between two and four operators, and it is largely private sector driven.
However, developments are still hampered by regulatory environments.
Mobile licences frequently require that operators rely on a fixed network operator for interconnection, and relatively few countries allow their mobile operators to operate their own international gateways.Tariffs are expected to come down once mobile and fixed have an even playing field, including international gateways.
Competition has already dramatically reduced mobile tariffs, which are now close to fixed services in some countries.Africa is experiencing growth rates in Second generation (2G) mobile systems now that much of the rest of the world saw during the nineties, and this growth will continue for some time to come - most African markets are far from reaching saturation points.
Unlike the rest of the world, Africa will not experience the painful dip between 2G and 3G deployments that the rest of the world saw in recent years - probably quite in the contrary: The first 3G systems were launched in Africa as early as March 2003 (Code Division Multiple Access - CDMA-2000) and November 2004 (Wave Division Multiple Access - WCDMA), not too far behind their European and American counterparts.
And unlike the rest of the world, Africa has the killer application for 3G in store: Internet access.
Fixed-line infrastructures are poor and owning a personal computer is out of reach for most Africans.
But more and more Africans do own a mobile phone and will embrace the opportunity to access the Internet with 3G phones.
Several mobile companies have already positioned themselves as ISPs.