EA mobile phone market to experience a period of growth

The East African mobile phone market is set for a period of growth as operators tap into the largely unexploited masses.

Experts estimate that out of the total population of 121.9 million only 37.6 million or 30.8 per cent are active subscribers.

However, as operators widen the net to capture the mass market, the average revenue generated per user is expected to fall forcing these firms to expand their Internet data offerings.

New services such as cable television and mobile money transfer will drive the strategic focus of players in the telecoms field in the region in the next five years.

According to a new report from industry researchers Frost & Sullivan on the region’s mobile markets, economic growth is expected to grow by 1.3 per cent for every 10 per cent increase in high-speed Internet connections.

Frost says there are over 19 companies angling for a share of the mobile market that will be worth $9 billion in five years.

At the top of every company heads agenda is how to create business synergies for the growth of trade within the region.

“As much Kenya is a focus for us, we exist in a region that is set to grow exponentially. How do we tap into that growth? This is what informs strategy,” said Mickael Ghossein, Telkom Kenya CEO.

Frost says although 65 per cent of the total revenues for mobile firms are expected to come from voice segment in the next five years, new areas like mobile money transfer and data beckon.

The realisation of a large regional economic bloc encompassing Burundi, Kenya, Rwanda, Tanzania and Uganda with a combined population of more than 125 million people, and a combined Gross Domestic Product of $60 billion, represents enormous opportunity to any investor.

For ICT firms, the shift in policy that has seen the formalisation of the East African bloc is secondary to the cross-border growth that has seen subscriber numbers escalate at super normal rates over the last ten years.

The signing of the EAC Common Market Protocol last year, is being seen by industry as the catalyst for cross-border growth.

“Our strategy has always been crafted at a regional level; we play in all markets and the EAC will bring about more opportunities for us to leverage the footprint we already have in place,” said Dorothy Ooko, Nokia’s Communication Manager for the region.

The key drivers in these markets include strong gross domestic product growth rates, increasing demand for mobile money transfer services and declining handset costs.

“East African consumers are spending more on mobile communications due to the low fixed-line network coverage, underdeveloped banking systems and the current limited availability of inexpensive handsets,” said Frost & Sullivan ICT analyst Jiaqi Sun.