1. 2012 African Mobile FactbookThis briefing paper provides a snapshot of the African mobile phonemarket, written and produced as a free servicefor executives involved in the mobile phone industry by the editorialteam of ‘Africa & Middle East Telecom Week’.For further information, please visitwww.africantelecomsnews.com Blycroft Publishing www.blycroft.com
2. Blycroft Ltd – Africa Mobile Factbook 2012 2Blycroft LimitedPublished 15th. March 2012. Copyright 2012www.africantelecomsnews.comDisclaimer and Legal Notices.Disclaimer.Every care has been taken in the preparation of this report to ensure that theinformation contained herein is accurate, factual and correct to the best of ourknowledge, at the time of publishing. All opinions, suppositions, estimates andrecommendations included in this report are solely the opinions of the authorsunless otherwise stated. Blycroft Limited accepts no liability for any loss ordamage or unforeseen consequential loss or damage arising from the use ofthe information contained within this document. The opinions, suppositions,estimates and recommendations within this report cannot be guaranteed, andreaders use this information at their own risk. The information published in thisdocument is subject to change without notice at any time, and Blycroft Limitedaccepts no liability or obligation to inform the reader of such changes.Blycroft Limited do not promote or endorse any specific companies orproducts, the views and opinions we express in this report are wholly our ownassessments, and independent from any external interest or influence. Manyterms and phrases and trade names used in this document are proprietaryand Blycroft Limited recognises and acknowledges that all trademarks arecopyright, belonging to their respective owners. Where possible, thisdocument accords such terms and phrases and trade names to theirrespective owners.All Rights Reserved. No part of this document can be copied, shared,redistributed, transmitted, displayed in the public domain, stored or displayedon any internal or external company or private network or electronic retrievalsystem, nor reprinted, republished, reconstituted in any way without theexpress written permission of the publisher.Forwarding of this electronic document without the correct legal licence istheft. It’s unethical, immoral and against the law.If you have any questions about the legal licence conditions under which thisreport has been distributed, please contact Blycroft Limited email@example.com.If you did not buy this report and a colleague or associate has sent it to you,do not assume you are legally entitled to read it: it is your responsibility toensure you have the correct legal licence to read this document.©2012, Blycroft Ltd.
3. Blycroft Ltd – Africa Mobile Factbook 2012 3Table of Contents1. Africa Ascendant – the last great mobile adventure 42: The lesser of two evils; or the case for GSM in Africa 63. Basic challenges for infrastructure in Africa 94. LTE in Middle East and Africa outstripping the rest of the world 125. Mobile wars in Africa: is Airtel winning? 156. Treading carefully? – Glo in Ghana: Launching an MNO from scratch 197. New growth areas for handsets 228. Applications in Africa 259. Banking on the unbanked 2810. The African MVNO – spent force or an idea before its time? 3111. Letting go: deregulation of African telecoms 3412. Risks and realities 3713. Positive prospects in Africa 4014. African Mobile Market Data 43About ‘Africa & Middle East Telecom-Week’ 52The Mobile Network Operators Directory 2012: Africa & Middle East 55Charts1.1 – Global Mobile Subscribers by Region 4Q 2011 41.2 – Global Mobile Subscriber Regional Change Q-o-Q 3Q 2011 v, 4Q 2011 51.3 – Global Mobile Penetration Q-o-Q 3Q 2011 v, 4Q 2011 52.1 Nigeria GSM v CDMA Subscribers 2007, 2009 & 2011 74.1 LTE Customers in Africa & Middle East to 2015 124.2 Spectrum Market Share 2015 135.1 Spot the difference: Airtel African Mobile Subscribers 4Q 2009 v 4Q 2011 175.2 Nigeria: Airtel Mobile Subscribers 4Q 2009 – 4Q 2011 185.3 Nigeria: Airtel Q-o-Q % change 4Q 2009 – 4Q 2011 186.1 Room for one more? Ghanaian Mobile Subscribers by Operator 4Q 2009 – 4Q 2011 217.1 Nokia still fighting the good fight 247.2 8.1.1 Africa Mobile Subscribers by Region 4Q 2010 368.1.2 Africa Mobile Subscribers Q-o-Q % Change by Region 4Q 2010 368.2.1 Africa Top 20 Mobile Operators 4Q 2010 378.2.2a/b Africa Top 20 Mobile Operators 4Q 2010 37/388.3.1 Africa Top 20 States by Mobile Subscribers 4Q 2010 398.3.2 Africa Top 20 States by Mobile Subscribers 4Q 2010 398.4 Primary African Mobile Subscriber Markets: Quarterly & Annual Change 4Q 2010 408.5.1 Africa Mobile Penetration 2Q 2011 418.5.2 Africa Mobile Penetration 2Q 2010 428.5.3 Africa Mobile Penetration 2Q 2011 v 2Q 2010 43About the Author:This briefing was authored by Roy Johnson, a writer specialising in IT andbusiness topics, who has regularly contributed to PC Magazine, as well asediting TechNet Magazine for Microsoft. Roy was formerly editor ofCommsAfrica and contributing editor for Intelligence magazine. The individualarticles appeared originally in the weekly issues of ‘Africa & Middle EastTelecom-Week’ - see www.africantelecomsnews.com for more details.©2012, Blycroft Ltd.
4. 1. Africa Ascendant – the last great mobile adventureEricsson, in its interim Traffic and Market Data Report for 4Q 2011, showsglobal mobile penetration reaching 85 percent in Q4 2011, up from 81 percentin 3Q 2011 by Ericsson’s reckoning. Global mobile subscriptions now totalaround 5.983 billion, up from 5.749 billion three months before.India and China accounted for approximately 35 percent of the estimated 182million new subscriptions added in 4Q 2011. Mobile subscriptions increasedby around 13 percent year-on-year and 3 percent quarter-on-quarter. Around75 percent of total subscriptions are GSM, whilst 15 percent areWCDMA/HSPA. 1.1 Global Mobile Subscribers by Region (Ericsson) 4Q 2011 Source: Ericsson interim Traffic and Market Data Report 4Q 2011 c. Blycroft 2012The Ericsson study shows Africa as the region with the greatest growth inboth the third and fourth quarters of 2011, topping China in both periods. TheMiddle East was ranked third in both periods.
5. Blycroft Ltd – Africa Mobile Factbook 2012 5 1.2 Mobile Subscriber Regional Q-o-Q % Change (Ericsson) 4Q 2011 v 3Q 2011 Source: Ericsson interim Traffic and Market Data Report 4Q 2011 c. Blycroft 2012However, it is in the Mobile Penetration stakes that Africa shows its truepotential, with currently the lowest mobile penetration globally, registering 60percent at the end of 4Q 2011, up from 55 percent in 3Q 2011. The MiddleEast had a penetration rate of 101 percent, up from 96 percent in 3Q 2011,according to the Ericsson data. 1.3 Global Mobile Penetration 4Q 2011 v 3Q 2011 (Ericsson) Source: Ericsson interim Traffic and Market Data Report 4Q 2011 c. Blycroft 2012©2012, Blycroft Ltd.
6. Blycroft Ltd – Africa Mobile Factbook 2012 62. The lesser of two evils; or the case for GSM in AfricaThere are hard choices for regulators, MNOs and consumers when it comesto deciding whether GSM or CDMA will prevail in Africa. But maybe there isroom for both.Historically, Africa has been – and still is – dominated by GSM technology.The reasons are simple: it was the first available option before NTT won ITUapproval for the CDMA system and its simplicity suited conditions on theground across the continent. Even today, the market in Africa is mostly voiceand text with relatively low adoption of data services. Lastly, it follows the leadof Europe’s major MNOs who have strong ties with countries across theregion.However, CDMA has advantages for consumers in delivery of video contentand MNOs busy across Africa have either rolled it out in limited areas, suchas densely populated cities, or experimented with it. The concern is that itmight be essential as the consumer market matures and moves more into thedata services space.Even major network equipment vendors such as Ericsson admit, however,that replacing GSM is not a likely outcome. Tellingly, that company has beenbusy promoting a dual solution involving network and handset technology thatwould enable to CDMA to coexist with GSM and that only requires consumersto buy somewhat more expensive handsets.Ultimately, the outcome depends on some basic realities faced by regulatorsand operators. Largely, those realities will dictate which technology sees thelargest adoption.The pros and cons of the two systems very much predict what has happenedthus far.CDMA has distinct advantages for handling high-density user locations. Insuch settings, it can offer lower operations costs for MNOs and improvedservice levels for users. It also offers better video delivery and is a keycomponent of most 3G networks.GSM is largely based on TDMA with some tweaks to minimise known issuessuch as interference with audio devices such as landline phones orloudspeakers and to boost its capacities for data transmission.These differentiators are fast becoming obsolete concerns in developedcountries where roll-outs of LTE and 4G are in progress. In developingnations, meanwhile, there is still some uncertainty regarding the roadmapfrom 2G to 3G and operators and vendors are placing their bets on quite howthat evolution will progress.On the face of it, Africa has proved before that there is willing adoption of thelatest technology and often a real avoidance of embracing any technology that©2012, Blycroft Ltd.
7. Blycroft Ltd – Africa Mobile Factbook 2012 7is seen as second-rate or obsolete. There is absolutely no doubt that CDMAwill gain traction but, as Ericsson said, it will not completely replace existingTDMA/GSM networks.There is a considerable investment involved in replacing GSM networkequipment with CDMA equivalents. The long-term advantages in cost ofownership will only be realised in locations where there are high densities ofusers. As for the maturity of the consumer market and growing demand forhigh-end video and data services, that is still very much only just beginning.On the technology front, the point has been made repeatedly over the last 10to 15 years in the IT business that a developing market like Africa can learnfrom overseas experiences and often leap-frog in progress, cutting outintermediate – and possibly expensive – steps in technology deployment.While it is a possibility that the consumer market in Africa will reach significantlevels of demand for broadband data services by the time LTE and 4G havebecome the new normal, it has to be noted that there remains a need for 3Gservices right now, albeit in lower rates of adoption than seen in developedeconomies.The flip side is that GSM is very well entrenched and the disadvantages it stillhas are less of an issue for African consumers and operators than for theirEuropean counterparts.Alongside that, there are some specific, regional issues that actually inhibitCDMA deployment, apart from the setup costs noted above. Certaintransmission frequencies are commonly used for CDMA and, as a result, thatequipment is less expensive.In many parts of Africa, those frequencies fall into reserved ranges (usually forTV services) and, although there are moves to reallocate spectrum, this is notan overnight process. Secondly, there are generally available skills for GSMacross Africa, whereas CDMA skills are harder to find and more expensive. 2.1 Nigeria GSM v CDMA Subscribers 2007, 2009 & 2011 Source: NCC c. Blycroft 2012©2012, Blycroft Ltd.
8. Blycroft Ltd – Africa Mobile Factbook 2012 8Inevitably, Nigeria is a benchmark for guessing what the future holds. In thatcountry, theres eighteen times times as many GSM users as CDMA ones,even though both systems were brought to market at about the same time.The key factors there are strong user demand for basic services and apreference for mobility, which the city-based CDMA networks cannot provide.Nevertheless, one lesson of history which has been re-learnt by telecomsmultinationals is that it is not wise to generalise about African markets. Theconditions on the ground vary greatly, as do the preferences of theconsumers.Even between apparently similar countries such as Ghana and Nigeria, thereare major differences which result from both social and economic conditions.So, while it might be certain that CDMA will grow and thrive in major urbansettings – and the world trend for urbanisation is as strong in Africa asanywhere else – it should be noted that drawing further conclusions is a high-risk exercise.Even a major operator such as South Africa’s Telkom actually disinvested inits Nigerian CDMA subsidiary. Generally, across Africa, a number of telecomsprojects that seemed promising a few years ago have been slowed orsuspended during the current recessionary economy.In the longer term, the future looks promising. Africa is one of the majorgrowth areas in the world and there are few other places where the gapbetween what infrastructure and services are actually in place and what couldbe achieved with the latest technology looms quite so large.The opportunity remains for MNOs with carefully thought plans to achievelarge revenues and, simultaneously, support the development of communities,skills and national economies across a vast region and massive continentalpopulation.Both GSM and CDMA have their roles in all this and, necessarily, those roleswill be complementary and not exclusive.©2012, Blycroft Ltd.
9. Blycroft Ltd – Africa Mobile Factbook 2012 93. Basic challenges for infrastructure in AfricaThe obvious notes about remote locations, difficult transport routes andunreliable electricity are just the tip of the iceberg. MNOs in many parts ofAfrica face other problems.Broadly speaking, the problems that operators face in Africa are welldocumented: large distances to be covered, unreliable road and rail transport,low per-capita policing ratios, occasionally extreme weather conditions andsocio-economic factors that drive high crime rates.Whereas this looks like a toxic cocktail for high-tech operations, it can be –and has been – dealt with in very practical ways by all MNOs across theregion. Beyond that, however, it raises a question regarding what waspreviously called “appropriate technology” for Africa and the answer to thatquestion might well be a signpost for the future.Setting up a network of towers in remote areas of Africa is more daunting thanin developed countries. Maintaining those towers then proves an even greaterchallenge. Even in urban areas, there are issues that are proportionallyheavier overhead than elsewhere in the world: electricity, fuel, weatherdamage and theft.On a simple business level, this means the costings and risk analysis forprojects in Africa are more carefully considered. Startup costs remain higher,despite possibly lower costs for labour and basic materials.Maintenance costs are the devil in the detail. MTN, the South African operatorthat holds significant slices of the market in many countries on the continent –21 in all, including Middle East operations – reports that a generator is stolenevery day, on average.That does not even include other damage such as cable theft or weatherevents. Nor does this cover the high costs of diesel fuel supplies and thenegative environmental impact.While the inflated maintenance costs can be dealt with on paper by adjustingthe ratio of capex to opex, the fact remains that increased costs anywhere inthe books run counter to providing low-cost, mass-market GSM access forAfrica’s huge and often widely distributed population.This has driven innovative approaches that are in the nice-to-have category inother parts of the world but practically a priority in Africa.Taking MTN as one example, that company has been running pilot projects topower base stations in remote parts of South Africa using both solar and windpower. Building on that experience, MTN Cameroon has a project running toequip its towers with solar panels provided by ZTE.©2012, Blycroft Ltd.
10. Blycroft Ltd – Africa Mobile Factbook 2012 10Typical of Chinese leadership in green technologies and a cautious approach,these installations are mounted with “theft-proof” screws on frames that are3.5 metres high. It’s not just generators that get stolen. There is a marketsomewhere for practically anything.Cynics will note that even such provisions might not be enough. But thepresent reports indicate that there have not been any problems thus far andMTN’s operating expenses are reduced.By comparison, Airtel has also been active in exploring solar power, beingcurrently engaged in a project to provide over 20,000 towers in India withpanels. There is a reasonable expectation that this will be expanded to Airtel’soperations in other locations as it proves its value.The advantages are not quite as prosaic as they might seem. There are fewstudies yet available for the solar initiatives in Africa but we can look at figuresfrom India as a guideline. Greenpeace India reports that some 60 percent ofpower used by GSM towers in that country is actually provided by dieselgenerators.That is, as with Africa, thanks to remote locations and unreliable grid supply.Greenpeace claims a potential cost saving of 300 percent for operators over a10-year time frame if they convert to solar.Even without that saving being a proven figure, what we do know is thatIndian MNOs are using something like three billion litres of diesel a year,producing some five million tons of carbon dioxide. And, of course, that is ahuge fuel bill compared to grid power and “free” solar power, quite apart fromthe environmental impact.While wind power might be an option in some specific locations, theadvantage to solar is that Africa is generally well supplied with enoughsunshine to avoid the power interruptions experienced with such installationsin countries outside the tropics. The same applies to other less consistentrenewables, such as wave or hydro-electric power sources. Solar still worksbetter.Looking ahead, it seems inevitable that MNOs across Africa will turn to solar.This is driven not just by green concerns and the need for being responsiblecorporate citizens but also by significant savings in running costs, includingreduced risk of equipment theft.A further predication that seems high-probability is that it will often becompanies from Shenzen providing the necessary technology. China’sforward-looking approach on all things green and its own interests in Africa’sresources and developing markets practically guarantee that.There is another aspect to operations in Africa worth noting. The samechallenges that face operators also affect their customers. Obviously, ifcustomers face problems with electricity, that is not good for business.©2012, Blycroft Ltd.
11. Blycroft Ltd – Africa Mobile Factbook 2012 11This issue is not yet being addressed with the same urgency as is seen withpower supplies for base stations but there are signs that point to increasedinterest in this area.There have been pilot projects across Africa for many years to provide ruralcommunities with domestic solar power and ICT equipment and radios thatwork from manually wound generators. These have mainly been the provinceof charities and NGOs.More recently, Nokia has gone ahead with its bicycle power charger. Thatproduct has been a success in developed countries where it has beenadopted for reasons of convenience and green awareness.In Africa, it is even more useful, as so many people use bicycles but do nothave access to grid power. It has been welcomed in the Great Lakescountries already, where it sells for more affordable prices than in the EU.Even for the lowest-income communities, the advantages are compelling. Itprovides power for handsets on the spot, eliminating the need to travel to findelectricity.Finally, while it would be no surprise that companies from India, China andSouth Africa are leading the charge, it is Africa that might well be the proof ofconcept for much wider adoption of renewable energy for mobile services atboth a corporate and consumer level.©2012, Blycroft Ltd.
12. Blycroft Ltd – Africa Mobile Factbook 2012 124. LTE in Middle East and Africa outstripping the rest of the worldGrowth rates for LTE services in the Middle East and Africa will outstrip therest of the world from 2013 onwards, analyst firm Signals and SystemsTelecom has forecast.LTE is rapidly gaining momentum in the Middle East region, and is forecast togrow at an average annual growth rate of 197 percent, with subscriptionsalready expected to reach 110,000 by the fourth quarter of 2011, according toa new report from SNS Telecom: ‘LTE in the Middle East & Africa 2011-2015’.Global LTE subscriptions have already passed the 3.7 million mark in 3Q2011, spread across 36 global networks.In Saudi Arabia there have already been commercial network launches fromZain Saudi, STC, Mobily, and in the UAE by Etisalat from September 2011,and over 26 LTE commitments. As a result the Middle East has initiated amajor push towards commercial LTE adoption, besides pioneering in thecommercial release of TD-LTE user devices.Both Saudi Arabia and the UAE are sparsely populated outside the majorurban areas, and operators are unlikely to deploy fibre infrastructure frombroadband beyond major urban and industrial areas as economic activity istypically highly concentrated in these areas.Technologies such as LTE could serve as a relatively cost-efficient option todeploy high-speed broadband services to smaller towns and villagesnationally, which operators attribute as the major reason to early LTEadoption both the countries. 4.1 LTE Customers in Africa & Middle East to 2015 Source: Signals and Systems Telecom, www.snstelecom.com©2012, Blycroft Ltd.
13. Blycroft Ltd – Africa Mobile Factbook 2012 13By the fourth quarter of 2011, it is expected that there will be over 6.6 millionLTE subscriptions globally with the Middle East accounting for a 1.7 percentmarket share with over 0.11 million users. With commercial LTE launches byall three major incumbents, Saudi Arabia is not only leading LTE adoptionwithin the Middle East, but it is also pioneering TD-LTE adoption globally bybecoming the first nation to commercially offer TD-LTE user devices.Saudi Arabia will lead LTE subscriptions in the Middle East with over 70,000subscriptions by 4Q 2011 and over 0.39 million by the fourth quarter of 2012,representing a year-on-year growth of 457 percent. This is being driven byearly deployments, attractive free trial packages such as those offered bySTC, bundled 3G/LTE pricing models, and the increasing demand for high-speed mobile broadband access in rural locations.By 2015, Saudi Arabia is expected to account for over 5.44 millionsubscriptions representing a compound annual growth rate of 197 percent, afigure that is much higher that the global CAGR of LTE adoption at 180percent. Globally there will be 410 million LTE customers by 2015.The UAE is expected to follow suit, with commercial LTE devices for Etisalatexpected to be launched in December 2011, following a pre-commercialnetwork release in September. du is also expected to commercially launch itsLTE network in due course, leading UAE’s LTE subscriptions to hit 40,000 bythe first quarter of 2012.Although the 2.3 gigahertz TDD spectrum is expected to retain the highestmarket share, driven by Saudi network deployments, re-farming is alsoexpected by 2013, which will make 1800 megahertz the most sought afterband.LTE deployments in Africa are also gaining momentum, and a number ofoperators are trialling LTE technology. In Egypt Vodafone, Etisalat Misr andMobinil have started trials, together with MTN, Cell C and Vodacom in SouthAfrica; and Globacom in Nigeria. 4.2 Spectrum Market Share 2015 Source: Signals and Systems Telecom, www.snstelecom.com©2012, Blycroft Ltd.
14. Blycroft Ltd – Africa Mobile Factbook 2012 14As the operator-preferred 2.6 gigahertz band has not yet been auctioned inmost countries, a number of operators have deployed their initial trialnetworks at 1800 megahertz, such as the MTN South Africa trial network.Vodacom and MTN are expected to carry out early commercial launchesbefore the second quarter of 2012, taking African LTE subscriptions to 0.35million by the end of 2012.By 2015, it is estimated that the Middle East will account for 7.49 million LTEsubscriptions, while Africa will account for 11.15 million subscriptions,representing global market shares of 1.8 and 2.7 percent respectively. Thelack of spectrum below one gigahertz in particular is likely to remain a majorhurdle along the way to LTE rollouts.Although the 2.3/2.6 gigahertz bands presently used in the Middle East arewidely backed by device manufacturers and equipment suppliers, this banddoes not penetrate buildings as effectively as spectrum in the lower frequencybands.SNS Telecom reckons that without sub-gigahertz spectrum, operators in theMiddle East will struggle to offer true high-speed services in the areas ofgreatest demand. In the UAE nearly three quarters of its mobile trafficoriginates inside buildings.©2012, Blycroft Ltd.
15. Blycroft Ltd – Africa Mobile Factbook 2012 155. Mobile wars in Africa: is Airtel winning?Competition in African markets is fierce. It really is a war zone. And, as withany conflict, the outcome hinges on decisions regarding strategy – and theavailable weaponry.Bharti Airtel has a history of making first moves and emerging as the winnerjust because of that. This is what built the company’s success in India, whereit remains the top MNO and second-largest fixed-line operator.In fact, thanks to the massive market it serves at home, at the time it acquiredthe Zain portfolio in March 2010 Airtel was reckoned to be the fifth largestmobile operator in the world on a proportional subscriber basis, putting itbehind the likes of China Mobile, Vodafone Group, American Movil andTelefonica, but ahead of China Unicom.As has been widely covered for over a year now, Airtel has been looking atAfrica as a new growth market. While it has a deal with Vodafone for theChannel Islands, Africa is the only other territory outside the Indiansubcontinent (including Bangladesh and Sri Lanka) that the company hasentered.The commonalities are compelling: similar markets, needs and infrastructure.The realities on the ground are somewhat more challenging: logistics,legislative compliance and serious local competition being foremost.The logistics of infrastructure in Africa are an equal challenge for all MNOs.That is a given. Where Airtel might have been overly optimistic is in hoping itsAfrica model would run similarly to its success in India, based on a first-to-market approach and having some leverage to overcome legislativeobstacles.Unfortunately, while Airtel has a 30-year history of being first in India (withpushbutton phones, cordless phones and then mobile), they were not first inAfrica. There were major EU, Middle East and South African players thereahead of them.In fact, Airtel’s African expansion is largely thanks to its takeover of Kuwait’sZain mobile operations in 15 countries. This was a beachhead, not aconquest. Zain only held dominant market share in a few countries.Going up against market leaders such as MTN of South Africa, Airtel applieda strategy of extensive cost cutting. This followed on what it achieved in India,cutting a deal with Ericsson for per-minute fees (rather than upfront payment)that enabled very low-cost call rates from the outset. Airtel has an all-Africa,five-year deal in place with Ericsson for network management that offerssimilar advantages. Elsewhere, Airtel is engaged with Nokia SiemensNetworks and Huawei, not keeping all its eggs in one basket, of course.©2012, Blycroft Ltd.
16. Blycroft Ltd – Africa Mobile Factbook 2012 16As a Plan B, possibly following on the indecisive outcome of Airtel’s low-costinvasion, the company has previously been negotiating a takeover of or(maybe) a joint venture with MTN itself. How this putative deal is describeddepends on which company is talking. This has been going on for some fouryears without a definitive ending. Even if it never happens, it is a signpost ofjust what Airtel would consider to get its Africa operations truly established.But let’s look at realities.Taking Nigeria as a bellwether example, Airtel’s charges are low, around 20kobo (about GBP 0.08) per minute, but three times that for the first minute.That is up against MTN charges of 50 kobo, although MTN offers a cheaperpeak rate (15 kobo) and more expensive off-peak rate.As always, comparisons are tricky, given the different pricing regimes on offer.Also difficult is working out which company is really winning. Airtel claimseither number-one or number-two positions in many of its Africa operations(11 out of 17 countries).Tellingly, no claims are made for Nigeria. Airtel is not just being coy. There isan ongoing dispute over branding in that country and the latest developmentis that Airtel has been court ordered to rebrand as Econet (EWN). Airtel willappeal that ruling, while complying in the interim.This dispute goes back as far as 2003 and is not yet over. It is, however, agood example of the challenges Airtel faces in African settings and, while itcontinues, the real winner is MTN, holding on to its own leading position inNigeria as well as its brand.To come back to what we said at the start of this chapter, winning wars is notjust a matter of having the best weaponry, although that helps. Without astrategy, chaotic retreat is the order of the day.Airtel’s strategy bears comparison with the different approaches of twoEuropean operators who have been busy in Africa, Vodafone and Orange.Vodafone’s approach has been targeted, achieving a small number of high-value operations. Orange went large, seizing opportunities wherever theyappeared. The final result is that Vodafone has good revenue and lowercosts, whereas Orange has higher costs and less revenue.What Airtel needs to prove is that its broad approach with low fee rates canwin against competitors who have a head start and better targeting. Currentusage, market share and consumer approval figures – where independentlyavailable – do not support a claim that Airtel is winning, despite the impressivegrowth that was claimed after the launch in 2010.This is, to a large extent, an inevitable result of the original acquisition byAirtel of Zain’s operations. Among the 15 countries involved, not every onewas clearly a winning proposition.©2012, Blycroft Ltd.
17. Blycroft Ltd – Africa Mobile Factbook 2012 17Nevertheless, do not underestimate Bharti Airtel. The company has deepresources, including enough to offer anything between USD 13 and USD 45billion (as reported) to buy out its main competitor, MTN. It is also licensed toroll out 3G in 12 countries, clearly focused on the expected maturity of Africanmarkets finally proceeding to data services instead of the fundamental voiceand text services that fuelled the original mobile boom on the continent. 5.1 Spot the difference: Bharti Airtel African Mobile Subscribers 4Q 2009 v 4Q 2011 Source: Blycroft Mobile Operator Database c. Blycroft 2012* Airtel figures adjusted to show 90-day active totalsOn a side issue that might well have bottom-line impact in the medium term,Airtel is pushing ahead with its Green Towers programme to upgrade 22,000of its sites in India to solar power over three years. The company won theMWC Green Mobile Award for that in 2011. Apart from the marketing boost,there are practical and financial advantages to such technology, especially inAfrica. Other MNOs are also exploring this option but Airtel is not justexperimenting. It has about 6,000 towers already running solar.But driving down rates may have backfired for Bharti. At the Mobile WorldCongress 2012 in Barcelona it reported that the African market had notresponded as expected to the slashing of call rates. The Airtel model,developed in India, assumed that as rates were cut, usage would increase, sothat subscribers would spend the same but make longer, or more, calls.However Airtel has discovered that the volume of calls has remained atprevious levels after the rate cuts were made; consumers preferring to spendthe savings on essentials, such as food. Bharti termed the outcome as an‘unexpected and surprising’ response. An elastic market - where demand forservices rises as prices fall - was critical to supporting Bhartis low-cost model.Chairman and Managing Director Sunil Mittal, was quoted as saying: "UnlikeIndia, we were surprised that in Africa, lower tariffs could not increasevolumes. In Africa, subscribers use the money saved on lower-calling rates to©2012, Blycroft Ltd.
18. Blycroft Ltd – Africa Mobile Factbook 2012 18buy food and not to talk more. This means that we have to think of a newmodel that works there ".While Nigeria is obviously the jewel in the crown, Airtel will continue to be aninfluence in other countries, driving down rates and forcing technologyupgrades.This has advantages for consumers but is a problem for operators as growthin Africa’s markets has currently reached a plateau. Big as Africa is, theremight not be enough room for all the players who are there at present. 5.2 Nigeria: Airtel Mobile Subscribers 4Q 2009 – 4Q 2011 Source: NCC c. Blycroft 2012 5.3 Airtel Q-o-Q % change 4Q 2009 – 4Q 2011 Source: NCC c. Blycroft 2012©2012, Blycroft Ltd.
19. Blycroft Ltd – Africa Mobile Factbook 2012 196. Treading carefully? – Glo in Ghana: Launching an MNO from scratchWhile the expansion of mobile markets in many countries across Africa is anundeniable opportunity, both private and public sectors are still looking for themagic formula to make it work for the benefit of all parties.Ghana is a case in point. Although Glo Mobile (Globacom of Nigeria) is statingthat its network is ready and has a number reservation campaign startedsince late January, this is not what was promised last year. So why is thereality not meeting expectations?As has been seen elsewhere on the continent, progressive privatisation is nota simple process, especially when the present market has been effectivelysaturated with major incumbents. This was – and still is – an issue for Cell Cin South Africa, going up against Vodacom and MTN. In Ghana, the majorplayers are multiple, including MTN (Scancom), Millicom, Airtel and Vodafone.Although Globacom seems like a good fit for the market in Ghana, being alsoAnglophone and from near-neighbour Nigeria, the launch of its services is nothappening at quite the pace expected.This is not because it lacks infrastructure. The company claims an investmentof some USD 750 million in 1,600 base stations; has landed the Glo 1 cablethat links to Europe and, by dedicated extension, to the US in Ghana; andpotential capacity for 10 million lines.Parallels with Globacom’s home territory in Nigeria abound. There are similarissues with logistics and geography and a similarity of focus between the tworegulatory authorities, NCA of Ghana and the NCC of Nigeria.So the cautious approach of Globacom in Ghana – whether made by choiceor not – raises some questions as to why apparently expanding markets arenot providing all the potential for new MNOs and increased competition.To use South Africa as a comparison, it has to be pointed out that private andpublic sector interests are not as smoothly aligned as they might seem.The step-by-step process of privatising telecoms in South Africa, oftendelayed and significantly behind its original schedule, was referred to as“managed privatisation”. It was also based on some assumptions regardingconsumer choice and market growth that might now be seen as perhaps over-optimistic.This regulatory approach falls between two chairs: it may not allow thefreedom that the private sector wants and it certainly will not happen at a pacedriven by consumer demand. As it evolves with the goal of creating a marketfair for all competitors it will, again, not move at a private-sector pace.There is then a problem at both ends of the equation when calculating risks innew mobile projects. Despite the miracle of widespread adoption of mobile©2012, Blycroft Ltd.
20. Blycroft Ltd – Africa Mobile Factbook 2012 20technology in Africa, the political realities run counter to the more fluidprivatisation seen previously in the UK or Australia, to name two textbookexamples. At the other end, the actual number of users is hard to establishand predictions based on any such assumptions can have major errormargins.In general, governments are not rapidly or heedlessly going to relinquishcontrol of cash-cow telecoms. Hence, the concept of “managed privatisation”which, cynics might say, really isn’t a free-market process.As for market size, potential growth and defining saturation in any onecountry, the real figures are opaque at best. For example, South Africa has apopulation of about 50 million – twice that of Ghana or one third that ofNigeria.Current, reasonable figures suggest that about 84 percent of South Africanshave a mobile phone or access to one. Figures for South Africa based ondifferent criteria indicate over 100 percent market penetration but let’s staywith the most conservative numbers. Ghana’s mobile penetration is estimatedat some 81 percent while Nigeria’s is around 55 percent. Now look at percapita GDP. South Africa leads with over USD 10,000 per annum. Nigeria isat about USD 2,500 and Ghana about USD 3,300.The one thing that drives consumer choices in mobile telecoms is novelty andthe inevitable disaffection with existing operators. After that come the moremundane choices based on coverage, QoS, service offerings and, of course,price.It is certainly a risk, however calculated, for a new MNO to move into a nearlysaturated market and hope to win over customers. Ghana is not as affluent asSouth Africa and Cell C has battled to gain market share even there. It istempting to predict the same future for Globacom in Ghana.No doubt, there is also an exit strategy. Assets can be sold off to othercompanies if the project fails. A quick look at a flurry of recent deals tounbundle and sell infrastructure in various parts of Africa shows that there isalways such potential.Despite the doubts, Globacom’s decision to launch in Ghana seems practicalin terms of its regional presence, infrastructure and past experience. It wasrated as the best network in Nigeria a few years ago, although recent figureswould tell a different story.However, a very simplistic calculation based on stated figures gives thisresult: USD 750 million invested for a maximum consumer base of 10 milliontranslates to an ARPU of USD 75 to break even.That seems achievable, until you factor in the likely slow adoption curve,based on Globacom’s reliance on disaffected customers migrating from the©2012, Blycroft Ltd.
21. Blycroft Ltd – Africa Mobile Factbook 2012 21dominant two operators. If only one million migrate, the break-even is USD750 or a fifth of the annual per-capita GDP. That looks less achievable.Realistically, if Globacom can win five million customers within five years, itsGhana operation starts to look doable. 6.1 Room for one more? Ghanaian Mobile Subscribers by Operator 4Q 2009 – 4Q 2011 Source: NCA c. Blycroft 2012Whether it can do that remains a question that only time can answer.The other question that cannot be answered without the test of time is justhow much impact data services will have.The pattern elsewhere in Africa is still for voice and text to dominate. Mobile-targeted services like Twitter have lower usage than in other parts of theworld. A current survey shows South Africa has the highest Twitter usage,followed by Kenya and Nigeria. Ghana ranked 20 out of the 20 countries inthe study.But one key point in that study is that young people (21 to 29) are drivingmobile Twitter usage. Another is that, based on Opera usage, Nigeria is thefifth-largest mobile internet user in the world.That bodes well for MNOs throughout Africa, as the market moves to dataservices. Whether that could save Globacom’s Ghana initiative remains to beseen.©2012, Blycroft Ltd.
22. Blycroft Ltd – Africa Mobile Factbook 2012 227. New growth areas for handsetsWhile it seems obvious that the mass market for handsets in Africa mainlycomprises basic models, there are reports of better than expected sales ofsmartphones. Is this a blip on the radar or a real trend curve?One thing that should not be forgotten is that aspirations in all markets arevery similar. Only the abilities, in terms of purchasing power, really vary.Across the globe, while priorities and needs might differ, consumers aredriven by similar concerns.One man’s bicycle is another man’s Porsche. The need for personal transportis universal and the purchasing choices are based on psychology that issurprisingly similar in any income group.So it is with mobile phones. In Africa, India and many other developingeconomies, it is both a luxury to have a personal communications and/orcomputing device, as well as a brutal necessity in places where landlines arefew, unreliable and postal services are just as poor.In fact, news has always travelled faster in Africa by word of mouth, person toperson, than by post. The advent of mobile communications changed all that.Across most of Africa, news travels faster now than newspapers, local TV oreven the localised internet access available at community centres canachieve. It spreads in speech and text through mobile phones.Add to that the purely personal need to stay in touch with friends, family andbusiness connections – as well as the compelling convenience factor – andyou can understand why people in developing countries are prepared tospend a fair percentage of the few USD a day they earn on airtime andhandsets.Looking at it from a distance, these are the same needs and aspirations foundin the US or EU. The difference is only that a basic speech and text handsetin parts of Africa is as proud a possession as a designer-branded smartphonewould be in New York.Broadly speaking, handsets can be put into three categories: “dumb” devicesthat offer only speech and text; “smart” devices that are fully equipped withbroadband connections of different types, full multimedia abilities and extrafeatures such as high-res cameras and GPS; and then the so-called “feature”phones that have some connectivity and specific features such as cameraand music player abilities but not the full package that smartphones offer.Globally, figures put out late last year in a survey by VisionMobile show theseoutlines. In the US, smartphone adoption is about 63 percent. In the EU, it isabout 51 percent. The other major regions – Asia/Pacific, Latin America andAfrica/Middle East all run at 17 to 19 percent. The “other” category in thesefigures is not broken down into “dumb” or “feature” models, although it can besafely assumed that most developed economies have few “dumb” handsets in©2012, Blycroft Ltd.
23. Blycroft Ltd – Africa Mobile Factbook 2012 23operation while rural parts of Africa, Asia and Latin America are dominated bysuch models.Focusing specifically on Africa, it should be pointed out that the trailingsmartphone adoption figure of 17 percent is still almost twice what wasexpected a couple of years ago, when most vendors were not even hoping toget into double digits. In fact, considering the ratio of poor to rich users acrossthe region – something like 95 to 5 percent or worse – having nearly a fifth ofthe market already on smartphones is remarkable.Firstly, this is because consumer demand is just the same in developingcountries as in affluent societies. The needs and aspirations are the same.The fact that the purchasing power is far less is also slightly mitigated by thegreater need. Communities that lack reliable landlines, internet access, TVservices or other entertainment facilities are more dependent on the accessthat mobile phones provide than their first-world counterparts.There is copious hearsay that mobile phones are used as family or evenpublic entertainment devices and even that the owners charge the audience.There is extensive use of mobile phones for news, farming information andeducational content.What the conservative view of smartphone adoption from a couple of yearsago failed to take into account is what one might call the “Arab Spring” factor.Where the need is great enough, proportionally high costs or limited, ratherthan universal, availability are overcome. Mobile phone usage in Africa iscertainly a luxury and nice-to-have. But it is also an essential for all but themost insular, rural communities.What cannot really be answered is just how many of the “other” handsets inAfrica are feature phones and how many are basic models. It can, however,be assumed that a very large percentage are basic models, many of themhanded down or sold on by users upgrading. Very little gets thrown away inAfrica if it still has any use or value at all.The flip side to the low adoption of smartphones – almost half the globalaverage figure of 30 percent – is that African markets can easily become adumping ground for unsuccessful models and obsolete technology. Even inthe ostensibly up-to-date markets such as Egypt, Nigeria and South Africa, itis not unusual to find current models are a few months, a few years and evena whole generation of technology behind US and EU products.Where that happens and to whatever extent it happens in terms of marketshare for different models, it has the effect of slowing down overall adoptionfigures. Feature phones of a year or two’s age might be sold to consumers assmartphones but they don’t count as such when looked at in a survey basedon global, first-world standards.©2012, Blycroft Ltd.
24. Blycroft Ltd – Africa Mobile Factbook 2012 24That said, the real miracle happening in African markets is that populationswith some of the world’s lowest per-capita income figures are still massivelyadopting mobile technology, including far more smartphones than anticipated.That ranks alongside the original miracle that mobile phones are todaypervasive in markets that just 20 years ago anticipated only niche andupmarket adoption.It remains to be seen whether smartphone adoption in Africa will improve butthe signs are positive that it will, creating a very significant growth point for theindustry as a whole. 7.1 Nokia still fighting the good fight… Source: Statcounter* Stats are based on aggregate data collected by StatCounter on a sampleexceeding 15 billion pageviews per month collected from across theStatCounter network of more than 3 million websites. Stats are updated andmade available every 4 hours, however are subject to quality assurancetesting and revision for 14 days from publication.©2012, Blycroft Ltd.
25. Blycroft Ltd – Africa Mobile Factbook 2012 258. Applications in AfricaWhile mobile banking remains the big story, there are plenty of other thingshappening on the continent that unlock the potential of mobile services forcommunities.What has been remarkable about the roll out and adoption of mobile bankingin Africa is its uptake, especially compared to developed countries whereadoption has been much lower and usually only driven by convenience.In Africa, it is need, not convenience, that drives adoption and there are plentyof mobile applications that have resulted from this. Some are literally world-leading examples of using available technology to solve problems and meetconsumer demand and user needs, rather than looking for a new technologythat might be practically and financially unobtainable.Following in the footsteps of the general success of mobile banking andbeyond what most people would regard as proper banking and financialservices, there are a number of transactional offerings that are still primarilyconcerned with the movement of funds as a service, rather than as just anecessary part of a purchase.One example is the specialist service Wizzit from South Africa, which is abranchless mobile/internet banking business. Wizzit has partnered with ABSAbank, one of that country’s four major banks, and the banking division of theSouth African Post Office but its primary focus is on providing banking bymobile phone. This includes having a debit card and covers a full range ofservices available to a cash or savings account customer. The key point isthat it can all be done by mobile phone, using even a basic 2G handset.A comparable service is Oltio, whose payD application was nominated for anMWC award. The application enables people to make online purchases whodo not have a credit card. This is a major bottleneck for online transactions inAfrica, where debit cards are not often accepted online. The payD systembridges the gap by using a debit card, with PIN verification from a mobilephone. That creates purchasing opportunities for a large number of peoplewho have money to spend but not the full range of banking services thatincludes a credit card.Perhaps at the other end of the financial services scale is M-Pesa, whichoperates in the Great Lakes region. This was a microfinance service that usedmobile phone channels for transactions. The widely adopted M-Pesaapplication now also supports basic banking services and payments, havingevolved to meet consumer demand.Then there are a slew of industry-specific services such as Slimtrader,developed in Seattle but deployed in Nigeria to make buying transportpassenger tickets by phone quick and easy. On a less commercial level, thereare mobile phone systems for identifying fake medicines running in both Eastand West Africa, showing some success in combating the huge fake drugs©2012, Blycroft Ltd.
26. Blycroft Ltd – Africa Mobile Factbook 2012 26market.The signposts are there for anyone to read. Reports are that there is a 21percent increase in African use of mobile phones for purchasing – higher thanany other region in the world. While the survey in question found thatincreasing smartphone adoption is a factor, the telling figure is that featurephone users are the largest part of the growing market.What is really revealing is that African consumers prefer using their phonesover any other method: 46 percent buying via mobile versus 10 percent onlinevia computer and only 44 percent buying in-store. Some 60 percent reportbuying at least one product online via mobile phone.Figures quoted by Nokia support the view that commerce in Africa isdependent on mobile. The company reports that micro-entrepreneurshipcovers some 90 percent of the employment base and about 65 percent of thecontinental GDP. Mobile phone applications are a key factor in supporting thiseconomic activity.The other signpost that cannot be missed is a survey from East Africa.In Kenya, 64 percent of users listen to digital music via mobile phones while24 percent access via computer; 45 percent prefer to chat via mobile and 25percent use computers. In Uganda, the figures are 48 percent listen to musicvia mobile versus 26 percent and 40 percent chat via mobile compared to 23percent.While consumer demand typically moves in the direction of entertainment, itshould not be forgotten that there are other services that are just as welldelivered by mobile phone: news (especially weather and farminginformation), education and even remote healthcare and medical services.Education is a primary concern. It is an obvious enabler of social andeconomic empowerment and Africa is generally a region where skills are hardto acquire or find. As global studies show, much of the success in higher skillsstarts with the very basic “three Rs” at primary level.But in South Africa, one of the better equipped countries on the continent,only some seven percent of schools have an adequate library and only about10 percent have sufficient online access and desktops for staff and pupils touse. Hence a recent initiative by MNO Vodacom to provide a cloud computingsolution to fill in the gap in educational resources.Elsewhere, there are pioneering programmes to provide mobile phone accessfor educational programmes running in East and West Africa. Nokia has asystem running in Tanzania that allows teachers to download content usingsmartphones for TV display in the classroom. There are similar initiatives in anumber of other countries.Probably the most famous African application is Ushahidi. The name means©2012, Blycroft Ltd.
27. Blycroft Ltd – Africa Mobile Factbook 2012 27“bearing witness” in Swahili and the app was developed in Kenya to reportand map the post-election violence in the country back in 2008. It works byupdates from mobile phone users to a website where the information is thenintegrated with Google Maps. It works so well that is has since been deployedfor emergency service support in regions affected by natural disasters,including Haiti and China.While such high-profile applications hold the spotlight and even lead somecommentators to ask whether Africa might become the first post-PC region ofthe world, it should not be forgotten that mobile phones are providing anessential service across the continent in much simpler ways. These includeupdating farmers on seasonal and weather information and updatinghealthcare workers and patients about disease outbreaks and treatmentoptions.The real story of applications in Africa remains how innovation has metessential needs with available technology – and what a vast difference thathas made in the lives of ordinary people.©2012, Blycroft Ltd.
28. Blycroft Ltd – Africa Mobile Factbook 2012 289. Banking on the unbankedA surprising amount of mobile innovation originated in Africa. Building onpervasive access to mobile phones, the banking industry is being smart aboutproviding phone banking services as just the latest example.Turning “problems” into “opportunities” is a key step in marketing. Thebanking industry across Africa has faced a range of challenges, some ofwhich obscure the very real market potential behind them.With extensive uptake of mobile phones across the continent, there wassuddenly the chance to realise this potential and resolve issues that have keptAfrican financial services at an almost 19th-century level of technologyoutside of urban areas.The reasons why this development was first considered and is still beingactively pursued are quite straightforward. The logistics of brick-and-mortarbank branches in many parts of Africa are horrendous. There are definitesecurity issues, the unwillingness of skilled staff to relocate to remote, ruralareas and then the frequent or entire lack of reliable communications by post,landline or the Internet.At the same time, there are enormous numbers of people who are unbanked,not only because of traditional attitudes that encourage mattress banking butalso because simply finding a branch to deal with is burdensome orimpossible.Some studies put the figure of unbanked people in the region at over 80percent – a very considerable market of some 400 million potential customers,even calculated on a conservative basis assuming only about half thepopulation are potential customers.In parallel to this, there is pervasive mobile phone access. From some 1million phones in 1996, Africa now has 400 to 500 million mobile phones(estimates vary), many of which are used by more than one user. Thatindicates at least half the region’s people have mobile access.It was an obvious choice to look at ways to bring phone banking to themasses, despite the conservative and risk-averse nature of bankinginstitutions.Practically all banks across Africa offer mobile banking services and the majorbanks all do. It is a huge market, even if you subtract the customers who haveinternet access or personal access to branches and simply run mobilebanking for convenience.The real challenge, of course, is the fact that most of the potential customersare 2G users and very few have smartphones. The real innovations in Africahave been a matter of meeting that challenge, rather than just introducing andpromoting mobile banking for the masses.©2012, Blycroft Ltd.
29. Blycroft Ltd – Africa Mobile Factbook 2012 29While a workable solution can be created using no more than voice and textchannels, the real security of 2G GSM technology – as opposed to 3G/CDMAnetworks and true internet banking that just uses the mobile phone as aterminal – lies with an obscure protocol known as unstructured supplementaryservice data (USSD).If you have used callback or balance checking on your phone, using oddentries that begin with an asterisk, those queries have been going directlyfrom your handset to the MNO’s servers via USSD. With a little tweaking andsome secure integration of the operator’s severs and your bank’s servers,USSD can be used as a secure channel for transactions.Most of the mobile banking solutions use USSD or STK (SIM applicationtoolkit) to create secure, verifiable channels for transactions. Although STK isclaimed to be more secure, it has the limitation that changes and upgradesrequire either that the SIM be exchanged or that the SIM, phone and networkis set up to use secure SMS SIM updating.In Africa and other developing economies, USSD has proved sufficientlysecure and robust to underpin mobile banking without having the updateproblems associated with STK.A second area which has been a great challenge is authentication – makingsure the user really is the right person. This is not a small matter. To takeonline credit card transaction problems as an example, banks in South Africareport a 77 percent increase for 2011, bringing the fraudulent transactionamount for “card not present” to around ZAR140 million for the year.The issue is not identifying the phone. That is what a SIM does. The simple-seeming SIM does a few other things as well. It has its own unique serialnumber (ICCID), the subscriber identity (IMSI), and two passwords (the userPIN and the “unlock PIN” password or PUK). As far as device identityverification goes, a SIM is a fairly comprehensive solution.As far as network and system security goes, there is encryption, as with anyremote banking solution, and use of secure SMS and TAC (transactionauthorisation codes, often called one-time passwords or OTP).Verifying the actual user is less certain. The standard is to use two-factorauthentication, where one factor is something the customer has (like the SIM)and the second is something the customer knows (like the bank PIN or someother password-style datum).This style of authentication is still the most common globally although it hasthe obvious flaws that the assumed customer may not actually have the SIM(it could be stolen or used by unauthorised persons) and the PIN or passwordcould be compromised where insiders in the system have leaked theinformation.©2012, Blycroft Ltd.
30. Blycroft Ltd – Africa Mobile Factbook 2012 30The chances of these happening are small but they do happen. However,what cases that have been made public prove is that auditing fairly rapidlyidentifies the problem and corrective action happens quickly. As with allsecurity matters, there is no perfect solution that is still user-friendly enough togain wide adoption, especially among customers who are not experiencedwith technology.Mobile banking in many parts of Africa has been a success. It continues to bea necessary and well utilised service in South Africa, the Great Lakes region,Nigeria, Ghana and many francophone countries.If it is to build on this success, mobile banking needs to be rolled out incountries that are at lower levels of technology and infrastructure maturity. Italso has to deal with an unknown but significant number of potentialcustomers who still lack access to mobile phones. These are often the peoplewho are not in a position to take on paid-for services. Global charities andNGOs are playing important roles in this area.Even so, mobile banking across Africa has already been a surprisingly well-adopted solution that drives economic progress and upliftment ofdisadvantaged communities.©2012, Blycroft Ltd.
31. Blycroft Ltd – Africa Mobile Factbook 2012 3110. The African MVNO – spent force or an idea before its time?It seems obvious at first sight that the MVNO model could work in Africa. It isnot yet happening and that brings us to discuss the reasons why.The art of good business is being a good middleman. This might not be theonly factor but it is a common element in many transactions.An MVNO is pretty much the ultimate middleman. Such a company need notown any infrastructure, buying network access from MNOs as required. Itmight even outsource its admin and billing operations to a specialist thirdparty called a mobile virtual network enabler (MVNE).All it needs to “own” are customers. This can be in terms of contracts signedor, if the MVNO has a home location register of its own, on the more familiarbasis of owning mobile phone numbers for subscribers.The MVNO concept was originally driven by the idea that competition wouldbe increased if national mobile markets had openings for wholesalers as wellas the massive network operators that – simply because of the enormouscapital required – would always be few in number. This model was launchedin Denmark in the early 1990s. It was successful there and has, over theyears, been launched in many other countries. There are over 500 companiesrunning MVNO operations worldwide, including a number of MNOs who runMVNO operations in parallel with their core activities.Broadly speaking, MVNOs typically target consumer markets with attractive“loss-leader” price offerings. There are more specialised operations that targetspecific markets with equally specific value propositions: business andenterprise markets; branded offerings to niche, brand-conscious markets; ad-supported networks that offer good prices because of the revenues they getfrom advertising; and ethnic (typically expat) operations that offer very goodprices for people to phone their home countries.Any one of these MVNO models has relevance in African markets. Obviously,with low-income subscribers, call cost is a primary concern. Businessesalways look for savings. Consumers in Africa are very brand-aware, despitetheir limited means. Advertising seems questionable until one considers that itis hard to get the message out on a continent where other channels (printmedia, TV, cinema, even radio) are limited in reach or very segmented – andmobile is a pervasive and inexpensive channel. As for ex-pat services, Africahas some of the largest migratory labour populations in the world.On top of all that, virtual operators would seem a very good fit in a regionwhere existing networks have been dominated since inception by one or twomain MNOs, sometimes originally state-owned, and there have been evenfewer opportunities for other operators to break into the markets than in theEU or elsewhere.However, MVNOs have not been a great success in Africa.©2012, Blycroft Ltd.
32. Blycroft Ltd – Africa Mobile Factbook 2012 32The primary reason is that the African market is still a significant growth area,unlike the mature markets of the first world where MVNOs have succeeded byoffering more competitive prices and snapping up disaffected customers fromthe major MNOs. Demand exceeds supply in Africa and the MVNO concept isfocused on a situation where there is little or no surplus demand. Also,ARPUs in Africa are often below the critical point for sustaining MVNOofferings. That is a hard figure to quantify but it is clear that MVNOs willsucceed where potential consumer spending is greater than the averageMNO cost. It is notable that Virgin Mobile succeeded in the UK, closed inSingapore, was sold off in the US and is not a major force even in acomparatively affluent country like South Africa.There is also the consideration that MVNOs really are aimed at surpluses inevery area except consumer demand. They do succeed where there issurplus income for more mobile services and surplus network capacity thatcan be leased in bulk deals at preferential prices. Africa is not there yet,despite the unbundling of infrastructure that has been seen in recent years.Those network assets were not unused. They were merely not sufficientlyprofitable for the MNOs who owned them.The last hurdle for African MVNOs is dealing with legislation and regulation.The continent, as a whole, is still shaking off the limitations of state control ofkey telecoms assets and deregulation is proceeding somewhat unevenly withsignificant differences in the process between individual countries. That muchcould be said for the global MVNO industry as well, with the EU and its strongsupport for the concept being a notable exception.What we have learnt in 20 years since the first MVNO launched and the 10years since such operations became commonplace is that the industry goesthrough certain phases.Initially, it follows the established MNO model, without major differences inwhat it offers apart from better prices. Then it becomes aggressivelycompetitive on prices to gain market share. That leads to some MVNOsbecoming unviable. They get absorbed by other operations, including theMNOs – but the overall impact is lower prices across the board from allplayers. After the necessary M&As have reduced the number of operators, thedifferentiators become unique brand offerings and niche markets, as well asthe attractive pricing.If that is a reasonable model of the adoption curve, where exactly could weplace Africa?The answer is complicated. It will depend on exactly which country we aretalking about. Among the 54-odd countries in the region, there are majordifferences in per-capita income, current maturity of infrastructure, relevantlegislation and regulatory requirements and even the on-the-ground basics ofconsumer needs and demand.©2012, Blycroft Ltd.
33. Blycroft Ltd – Africa Mobile Factbook 2012 33An objective analysis must conclude that the MVNO model can work in Africa.It has many advantages that are just as – or even more – applicable in thatregion as they are in developed markets where MVNOs have becomeentrenched with anything between 10 and 20 percent market share. SomeMNOs would be quite happy with such figures.At the same time, an objective view must note that the caveat is “not yet”.The critical conditions of saturated demand, excess capacity and flexibility ofdisposable income have not yet been met across the continent. In specificcountries or locations within those countries, MVNOs can survive. But broadadoption of the model is a future prospect that awaits greater maturity of thecontinental markets and infrastructure. A warning from history - Virgin in SingaporeJust nine months after launch, in July 2002, Virgin Mobile pulled out of Singapore leavingnetwork operator Singtel with a loss of about USD 25.6 million. At the time Ivan Tan, asSingTel’s spokesman, said that the one-off charge allowed for the fact that not all of SingTelsinitial USD 50 million investment had been spent. According to Tan, the charge was inaddition to operational losses made by the venture in the previous financial year.At the time the two said in a joint statement: "Both the Virgin Group and its partner SingTelview the market [as] too saturated to sustain an otherwise successful virtual network operatormodel. The subscriber net growth for mobile phone operators in the Singapore market has notbeen sufficient to sustain a new entrant in this mature market place."Virgin Mobile began its operations in Singapore in October 2001 and signed-up some 30,000customers by the time of its demise, compared to the 1.8 million it had in the UK, and 220,000in Australia. This compared to SingTel with some 1.4 million subscribers, MobileOne Asia withabout 900,000 and StarHub 350,000.Prior to the closure, SingTel Mobile’s CEO Lucas Chow in March 2002 had claimed thatVirgin was not communicating its value proposition to the market well enough. Chow hadbeen quoted as saying: "They are behind what we hoped that they would do. There are manyreasons for that. I think the management team are putting effort in terms of earning their seatat the table"."The Singapore market is actually a very sophisticated market and the users have a certainset of expectations and when you do not deliver that set of expectations, it is very difficult toactually get new subscribers," he added. He said that while Virgin Mobiles strategy is"unique", the company may need to brush up on getting its message across to the market.©2012, Blycroft Ltd.
34. Blycroft Ltd – Africa Mobile Factbook 2012 3411. Letting go: deregulation of African telecomsThe benefits of deregulation are undeniable: improved economic growth andfacilitated participation in the global economy. But the path to that utopia hasmany branches and there is no benefit that comes without a price.Before discussing the current status of telecoms deregulation across Africa, itis worth noting some history, since that still has a significant impact today.While most countries on the continent have been in a post-colonial phase ofdevelopment for some 50 years, the legacy of the past is still there. In manycases, centralised control of strategic assets such as telecoms by colonialpowers was initially replaced only by centralised control under the newindependent governments. Obviously, this was a change in name but not instructure, purpose or process.With few exceptions, privatisation and free-market competition ran counter tothe socialist manifesto supported by many of the new governments.A later phase started in the 1990s, with African governments looking at alarger, more capitalist world than they focused on before the collapse of theSoviet Union. This also followed on the success of deregulation in developedeconomies and the growing pressure from international bodies – and tradingpartners – to meet open and fair-trade standards. It also provided a usefulboost for government coffers although commentators would talk about “sellingoff the silverware”.The largest consideration in telecoms deregulation, which is both a legacy ofthe past and a very present practicality, is that telecoms has been a cash cowfor every country. Run by government monopolies at non-negotiable prices,telecoms was a zero-sum game with only one possible winner.Despite the inexorable pressure to privatise and deregulate, governmentshave generally not leapt at the opportunity, either phasing it in on extendedtime scales or ensuring that licensing regimes are imposed to fill the gapcreated by lost revenue from citizen consumers.This has not been a simple process and it is far from resolved today. It hasalso been a net inhibitor of investment and new technology infrastructuredeployment.If there is a path to achieving Africa’s stated goals of social and economicupliftment without unacceptable losses for state revenues, it could be said thatthe continent stands at a fork on that path today.Put simplistically, the choices are: hold on to local control and slow theprogress towards working in global markets on an even-footing basis; orsurrender to foreign interests for expedient reasons and hope the resultsjustify the decision.Despite all the debate and agreements of the last several decades, theAfrican Union – including other regional groupings such as SADC, ECOWAS©2012, Blycroft Ltd.
35. Blycroft Ltd – Africa Mobile Factbook 2012 35and the EAC – has often failed to enact the unified vision of progress spelt outin agreements such as NEPAD.While critics see this failure as either a lack of political will or the triumph ofparochial over regional interests, there is a cold economic reality behind it.Africa lacks the financial services and resources required for cross-border, letalone continental, projects – especially those that require high-technologyinfrastructure on a massive scale. Few African countries or companies havethe resources to even become players in telecoms without resorting to foreignloans which are hard to find in the current economic climate and have a lot ofsmall print.As a result, governments have given way to a new colonialism where financeand interests come from overseas, including both private-sector companiesand foreign governments.It is no surprise that the major players in the evolving telecoms marketsacross Africa are major EU companies (leveraging historical ties), SouthAfrican companies (with a common history and regional influence) and,increasingly, India and China.Once again, Nigeria is a telling case study on all these issues. The countrywas under military rule until 1999 and centralised control was the order of theday. The national service provider was NITEL and the regulator (NCC) had asomewhat symbiotic relationship with the parastatal monopoly.Deregulation began with the democratic election of a civilian government.Fourteen years on, NITEL is still not privatised, as was intended; the NCC hasa slightly ambiguous role between protecting state and consumer intereststhat may not always agree; and the major players in the telecoms space(predominantly mobile) are mainly foreign – from South Africa, India andChina.This is not to say that Nigerian telecoms deregulation is a failure – far from it.The country is the most populous nation in Africa, has a strong economy andhas achieved remarkable uptake of mobile services, approaching saturation. Itis still regarded as one of the top mobile growth areas in the world.The point is that Nigeria’s progress has not been a simple straight-line graphand now its telecoms market is serviced largely by foreign companies.Telecoms remains that country’s second-largest source of revenue, after oiland gas. That is another industry where the players are foreign but the stategets significant income.Given the specific constraints in Africa, both historical and economic, it is notthe general rule that full, free-market privatisation will proceed as it did in theUK or Australia. Africa tends to a hybrid model where private-sector interestsare involved but governments retain some control and important revenue.©2012, Blycroft Ltd.
36. Blycroft Ltd – Africa Mobile Factbook 2012 36This brings us back to the old criticism of selling off the silverware and, at thepresent moment, quite what involvement with BRICS entails.The 2010 inclusion of South Africa in the former bloc of Brazil, Russia, Indiaand China was surprising, despite close ties forged in G20 activities. Thecountry has about a third of the population of Russia. In terms of size ofeconomies, the other countries are in the top ten but South Africa is at thebottom of the top 30. But it is the gateway to Africa, in truth as well as statedin its own marketing.It would be fair to assume that BRICS’ interest in Africa is not just a matter offinding markets for the member countries’ products. Africa is still almostexclusively centred on resource economies: oil, gas, precious metals andminerals. China controls about 95 percent of world production of the rare-earth metals used in mobile phones, computers and energy-saving lightbulbs.Africa is the only other place where these are readily found in quantity.Canada has reserves but extracting them would be costly.So there is a new Grab for Africa in progress and quite how telecomsderegulation plays out is profoundly affected by this, with outcomes that aredifficult to predict.©2012, Blycroft Ltd.
37. Blycroft Ltd – Africa Mobile Factbook 2012 3712. Risks and realitiesAfrica is not the only part of the world where corruption can be an issue. Thereal question is: how do corporate investors deal with it?Before discussing this, it needs to be made clear that corruption of one type oranother is a concern everywhere. Even in well-regulated economies andcarefully monitored jurisdictions, it still happens. That applies in countrieswhere there is a traditional respect for the rule of law as well as in thosewhere traditions are somewhat more cavalier and there are businessapproaches that have a frontier-society attitude.Then there is the cynical but possibly realistic view that major internationaldeals are especially prone to some element of corruption in how they arenegotiated and closed. Such deals involve large amounts of money,governments that precariously balance their public image and their realagenda, powerful individuals and organisations that are closely tied togovernments and the often adversarial public- and private-sector interests.The real issue is not just corruption or even what type or degree of corruptionexists.However great an equaliser globalisation really is, it has not yet created auniform culture across the world. Individual regions and countries haveequally individual characteristics. Corruption of some type, from subtle toobviously venal, is sadly an ubiquitous risk factor and different regions havedifferent attitudes about it.What really impacts business deals is the perception of that corruption. Whenit comes to FDI, a foreign government or company stands more to lose fromreputational damage than even the direct costs of deals cancelled or assetsexpropriated. Executives in both the public and private sectors are mindful ofthis, as are their shareholders and stakeholders. Should a questionable dealbecome public knowledge, there can be extensive damage.With this risk-averse backdrop, it is worth looking at the figures fromTransparency International (TI), the global NGO whose figures focus onperceptions of corruption, rather than just dealing with instances that havebecome public knowledge.Tellingly, TI’s corruption “barometer” reports that the situation hasdeteriorated: 60 percent of those surveyed in 2010 say corruption hasincreased in the preceding three years while 25 percent report actually payingbribes.Africa, as a whole, is perceived as worse than South America, is on a par withRussia and has two of the ten worst-perceived countries in the world. Thebest-perceived African country (Botswana) only makes 32 on the TI rankings,while regional superpowers South Africa and Nigeria come in at 64 and 143respectively, out of 182 nations reported.©2012, Blycroft Ltd.
38. Blycroft Ltd – Africa Mobile Factbook 2012 38There is also reporting on the “supply” side of international bribery, thelikelihood of paying a bribe to get a contract – the above figures being the“demand” side, the likelihood of expecting a bribe. In terms of sectors,telecoms gets 6.7 out of 10, looking at worldwide opinion. That is compared toleast corrupt agriculture at 7.7 and most corrupt public works at 5.3 – and onlyslightly better than the arms industry’s 6.6 score.Just to underline what was earlier stated about corruption being a global risk,the “cleanest” countries whose companies were least likely to pay bribes(Netherlands and Switzerland) only score 8.8 out of 10 and South Africa’scompanies only score 7.6, Russia’s score of 6.1 being the lowest.These figures are not cheerful reading and it should be remembered thatAfrica is regionally at the lower end of the scale in terms of world perceptions.It also has to be noted that telecoms corruption, where it happens, is not avictimless crime. Corruption involving armaments or pharmaceuticals might bemore high-profile and emotive but the downstream effects are similar. As TIpoints out in its manifesto, corruption – “Corruption is the abuse of entrustedpower for private gain” – has the knock-on effects of perpetuating poverty andslowing down economic development.Where telecoms deals are blocked, delayed or ineffectively implemented, thebenefits to the communities involved are reduced or negated. This isespecially a problem in a region of the world where better access tocommunications holds out the promise of all parties being enabled to doglobal business on an equal footing and people getting the resources toimprove their education, employment prospects and their living standards.Of course, beyond the ethical and philosophical issues are the practicalbusiness realities. How should foreign companies approach the issue?It is not as if Africa is without potential. There are resources aplenty and anearly one-billion developing population of potential consumers. Telecomsplays an integral role in enabling development at all levels, especially on acontinent where familiar IT networks are few, limited to urban areas and oftenwell below global standards for QoS.In terms of FDI, there has been an understandable slowdown for the lastcouple of years, with UNCTAD (United Nations Conference on Trade andDevelopment) reporting almost zero growth. It also highlights Africa as amarginalised region with about half the population living on about USD1 perday.OECD figures show the same plateau pattern except for G20 countries, whichare slightly ahead of the curve. The developing world is still developing,obviously – and it is a growth point. The active role of Indian and Chinesecompanies in Africa is at the forefront while EU and US investments haveslowed along with their national economies. These investments fromexpanding BRICS economies are strong circumstantial evidence that Africa isa place to invest if the funds are available.©2012, Blycroft Ltd.
39. Blycroft Ltd – Africa Mobile Factbook 2012 39To take advantage of the growth opportunities in Africa, foreign companieshave to factor in corruption as part of their risk analysis. This is not a new ideabut it is a slippery concept to quantify. It is also necessary to look at specificcases: Botwsana has a reputation on a par with most of Europe, whileSomalia has the dubious honour of being rated the most corrupt nation in theworld.Finally, corruption is the elephant in the room. It is not something mostbusinesses would openly discuss. But it is a very real variable in the equationif one wishes to explore developing economies anywhere, Africa included.©2012, Blycroft Ltd.
40. Blycroft Ltd – Africa Mobile Factbook 2012 4013. Positive prospects in AfricaDespite the global recession and one of the lowest per-capita income levels inthe world, BRICS countries – and others – are investing in Africa ahead ofother markets. Why are they doing this?In the previous article, we looked at the downside for foreign investment inAfrica. The fact remains, however, that expanding economies with money tospend are focusing on Africa: China, India and South Africa to mention justthe obvious ones.Africa is full of surprises. Over 2,000 years ago this was noted by Aristotle andrepeated by the Roman writer Pliny the Elder: “There is always somethingnew coming out of Africa”. Admittedly, the phrase was applied in the study ofnatural history but it has often been repeated since in other fields.What has been seen over the last 50 years is a boom in sought-after naturalresources: oil, gas, platinum-group metals, rare-earth group metals. Thiseclipses the original resource markets of gold and gemstones. It is also worthmentioning Africa’s massive reserves of coal and industrial metals such asiron, zinc and copper.Then there is the socio-economic surprise of mobile phone adoption acrossthe continent. It seems obvious, with hindsight, why this was such a successbut to dismiss it simplistically ignores the massive changes in consumerattitudes that were involved – as well as not a few innovations in servicedelivery that were pioneered in Africa, free voicemail and text bankingservices to name just two.The African telecoms industry is at a tipping point at present. As always withsuch a moment, it is hard to say when the massive change will happen. Theoutcome is also uncertain but only because it depends on human decisions –mainly government decisions – about whether to leverage the new potentialeffectively and quickly or cautiously delay the developments and risk losingmomentum.The potential is partly that the rest of the world is, as always, interested indoing business with Africa for its own advantage. The search for resourcesand markets is why China and India are so busy in Africa. But the realpotential for Africa is a step beyond that.Over the last decade, Africa’s connectivity – once the worst in the world – hasjumped by a factor of five to 20TB. Ten years ago, outside of the North Africastates, there was only one cable and heavy reliance on satellite services.About 95 percent of the internet usage was in South Africa alone, with somerouting on to neighbouring countries.Today, there are five cables in use or shortly to become usable, with two newones coming in this year. In 2013, the large South Atlantic Express cable will©2012, Blycroft Ltd.
41. Blycroft Ltd – Africa Mobile Factbook 2012 41become operational, connecting Africa to Brazil and bringing capacity to over30TB.Five years ago, much of this was blue-sky planning. Now, these cables arelanded and lit.The burning question is: what will Africa do with all that bandwidth?Initially at least, it will not be used for African IT networks. Outside of a fewcountries and often limited to urban centres, these simply do not exist. If youadded together all the traditional IT usage of the continent, including high-usage countries, big businesses and academic institutions, it would only equala fraction of the bandwidth soon available.The channel will be mobile, with another of Africa’s surprises taking centrestage – unexpectedly high adoption of smartphones and a number of 3Grollouts already in progress in areas that once were consider hopeless forbasic 2G. There are also a number of countries already exploring LTE and4G: Egypt, Libya, Kenya, Nigeria, Namibia and South Africa.The problem is getting these services out to the population. Operators canmake money in high-density locations like Lagos or Johannesburg. To takethe services out into the countryside or provide cross-border connections forthe often less affluent landlocked countries requires more than just acommercial incentive: it requires regional initiatives, political will and private-public sector partnerships.There is no lack of vision. African countries all understand the benefits ofbetter communications. Many lack the economic resources to invest innetwork infrastructure while they deal with more pressing issues. Others arereluctant to deregulate and create an environment attractive to foreigninvestment and the conditions that make PPPs viable.This is the tipping point. The demand is there from international tradingpartners, international technology vendors, operators (both local and foreign)and from citizen consumers. It just awaits more governments to follow thelead of those West, East and Southern African nations that have already gonethe route of deregulation. Africa has been Alcatel-Lucent’s best market for thelast three years, as it reports. Now it should be the turn of network equipmentvendors and operators to build on that foundation.There are some backbones in place. The Great Lakes countries have theirs,there is the Central African Backbone to the west and Southern Africa is stillsupplied mainly from South Africa.More work needs to be done. Like international cables, backbones need to behooked to distribution, local switchgear and towers that are not yet there andcostly to build.©2012, Blycroft Ltd.
42. Blycroft Ltd – Africa Mobile Factbook 2012 42This is the other side of the PPP coin. Operators will build distributionnetworks if the regulatory environment is conducive to such investments.Private sector entities will expect to retain ownership and control of theirassets, as well as some latitude in terms of pricing.All this proceeds in phases. Landing of cables is a necessary first step.Establishing a backbone network is next. Then comes local distribution.Beyond that deregulation is needed to unbundle the local loop and create acompetitive, free-market environment and, last but not least, to free upspectrum for additional 3G and, eventually, 4G services.While it seems that there are challenges aplenty, as we have said before, aproblem is just an opportunity seen the wrong way.There is massive market potential in Africa and the real question is whether itwill be EU companies with strong historic ties or the assertive members ofBRICS who will succeed in building on that.One thing can be certain. There will be more surprises from Africa.©2012, Blycroft Ltd.
43. Blycroft Ltd – Africa Mobile Factbook 2012 4314. African Mobile Market Data14.1.1 Africa Mobile Subscribers by Region 4Q 2010 Source: industry sources, Blycroft estimates c. Blycroft 201214.1.2 Africa Mobile Subscribers Q-o-Q % Change by Region 4Q 2010 Source: industry sources, Blycroft estimates c. Blycroft 2012©2012, Blycroft Ltd.
44. Blycroft Ltd – Africa Mobile Factbook 2012 44 14.2.1 Africa Top 20 Mobile Operators 4Q 2010 Rank State Operator 4Q10 Africa % Share 1 Nigeria MTN 38.7 7.1% 2 Egypt Vodafone 31.8 5.8% 3 Egypt MobiNil 30.2 5.6% 4 South Africa Vodacom 25.3 4.7% 5 Nigeria Glo Mobile 19.6 3.6% 6 South Africa MTN 18.8 3.5% 7 Kenya Safaricom 17.5 3.2% 8 Morocco Maroc Telecom 16.9 3.1% 9 Nigeria Airtel 15.8 2.9% 10 Algeria Djezzy 15.1 2.8% 11 Morocco Méditel 10.8 2.0% 12 Sudan (north) Zain 9.9 1.8% 13 Algeria Mobilis 9.0 1.7% 14 Ghana Scancom (MTN) 8.7 1.6% 15 Tanzania Vodacom Tanzania 8.7 1.6% 16 Egypt Etisalat Misr 8.6 1.6% 17 Libya Libyana 8.6 1.6% 18 Algeria Nedjma 8.3 1.5% 19 South Africa Cell-C 7.3 1.3% 20 Nigeria Etisalat 6.8 1.2% Others 226.9 41.8% Grand Total 543.4 100.0% Source: industry sources, Blycroft estimates c. Blycroft 2012 14.2.2 Africa Top 20 Mobile Operators 4Q 2010 Source: industry sources, Blycroft estimates c. Blycroft 2012©2012, Blycroft Ltd.
45. Blycroft Ltd – Africa Mobile Factbook 2012 45 Source: industry sources, Blycroft estimates c. Blycroft 2012©2012, Blycroft Ltd.
46. Blycroft Ltd – Africa Mobile Factbook 2012 46 14.3.1 Africa Top 20 States by Mobile Subscribers 4Q 2010 Rank State 4Q10 Africa % Share 1 Nigeria 87.30 16.1% 2 Egypt 70.66 13.0% 3 South Africa 51.61 9.5% 4 Algeria 32.38 6.0% 5 Morocco 31.98 5.9% 6 Kenya 24.97 4.6% 7 Tanzania 20.98 3.9% 8 Ghana 17.02 3.1% 9 Sudan (north) 16.85 3.1% 10 Cote dIvoire 14.71 2.7% 11 Uganda 14.29 2.6% 12 Libya 11.82 2.2% 13 DRC 11.71 2.2% 14 Tunisia 11.14 2.1% 15 Angola 8.89 1.6% 16 Cameroon 8.36 1.5% 17 Senegal 8.34 1.5% 18 Zimbabwe 7.88 1.5% 19 Mali 6.88 1.3% 20 Mozambique 6.64 1.2% Rest of Africa 78.97 14.5% Total 543.40 100.0% Source: industry sources, Blycroft estimates c. Blycroft 201214.3.2 Africa Top 20 States by Mobile Subscribers 4Q 2010 Source: industry sources, Blycroft estimates c. Blycroft 2012©2012, Blycroft Ltd.
51. Blycroft Ltd – Africa Mobile Factbook 2012 51 40 Burkina Faso 27% 38% Rwanda 27% 32% 41 Mozambique 26% 32% Sao Tome & 56% 65% Principe 42 Rwanda 27% 32% Senegal 61% 74% 43 Chad 24% 30% Seychelles 173% 181% 44 Madagascar 24% 28% Sierra Leone 40% 46% 45 Somalia 24% 26% Somalia 24% 26% 46 Niger 19% 25% South Africa 96% 115% 47 Comoros 19% 22% South Sudan 9% 12% 48 Malawi 18% 21% Sudan 43% 52% 49 Burundi 12% 20% Swaziland 49% 53% 50 CAR 16% 19% Tanzania 46% 52% 51 DRC 15% 18% Togo 33% 39% 52 Djibouti 15% 16% Tunisia 101% 108% 53 Ethiopia 4% 12% Uganda 38% 46% 54 South Sudan 9% 12% Zambia 36% 45% 55 Eritrea 3% 4% Zimbabwe 49% 56% 56 All Africa 48% 56% All Africa 48% 56% Source: industry sources, Blycroft estimates c. Blycroft 2012©2012, Blycroft Ltd.
52. Blycroft Ltd – Africa Mobile Factbook 2012 5215. About this research service:africa & middle east telecom week (AMETW) is a paid-for subscription service, with 48weekly research updates per annum. The title covers all aspects of regional wireless andwireline news, and is sent via e-mail each Thursday as a PDF attachment.What you get:An annual subscription to Africa & Middle East Telecom Week gives you: 48-weekly issues (news and commentary)...each issue contains mobile operator data and statistics drawn down from Blycrofts Database of Mobile Operator Statistics, together with 28 or more news articles focusing on mobile and fixed M&A; infrastructure developments; licensing and regulatory issues, and much more... 12 Country Reports...each month a Budde.com Country Report is published and is available to subscribers in the Online Archive. Additionally, all previous reports are also available.©2012, Blycroft Ltd.
53. Blycroft Ltd – Africa Mobile Factbook 2012 534 sets of Mobile Operator Subscriber Numbers and Analysis...each issue has a data setextracted from Blycrofts Mobile Operator Subscriber Database, and each quarter builds-up togive you a complete set of operator statistics and analysis.A fully searchable archive...containing some 15,400 articles and data sets.The Archive allows you to track the stories that matter...as they develop.©2012, Blycroft Ltd.
54. Blycroft Ltd – Africa Mobile Factbook 2012 54©2012, Blycroft Ltd.
55. The Africa MNO Directory 2012 © Blycroft Ltd 2012
56. ORDER ONLINE AT www.MNODirectory.com THE AFRICA MNO DIRECTORY 2012  February 2012  182 MNOs  600 Management contact  PDF & Excel formatThis directory tracks mobile network operators; companies providing mobilevoice services as their core activity using their own licensed spectrumfrequencies across their own network of base stations. WLL, MVNO, WiFi andWiMAX (MNOs which also provide WiMAX are tracked) only operators are notincluded in The MNO Directory.Research for the directory has been conducted in house January 2012, forrelease February 2012. Subscriber data for the Africa & Middle-East sectionhas been extracted from Blycroft’s weekly research service, Africa & Middle-East Telecom-Week. Other subscriber data has been extracted from operatorsand regulators.Information such as network technology has been retained from previouseditions, while fields such as ownership have been used as a guide to either confirm or replace information with thelatest the research team could find. Management contacts are either as publicised by the operators or have beenreferenced within trade media during September 2011 to January 2012. All data, including subscriber data is providedon a where possible basis and is provided to assist in building a profile of each MNO.PROFILESProfiles contain company contact information, ownership and network technology information, subscriber data andmanagement contacts. It is not always possible to provide 100% complete profiles.Contact info: Main telephone number(s), fax number, address and brand URL. Where a main telephone number is notavailable and the company has not offered one, we have listed a customer service number or similar rather than nonumber. In some instances this is in fact a main number too.Ownership: Name of parent company and URL.Network tech: GSM/CDMA/iDEN, GPRS, EDGE, 3G and 4G (LTE and WiMAX). The directory contains a lot of networktechnology information including HSDPA, HSUPD and HSPA+. Please note the directory does not provide a definitivelisting of all active operators for each technology, the directory does not aim to list networks in trial status phases.MANAGEMENT CONTACTSThe AFRICA MNO Directory 2012 contains over 600 named management contacts. These people are selected from theMNOs’ senior management teams and feature job titles such as President, CEO (Chief Executive Officer), CFO (ChiefFinancial Officer), CTO (Chief Technology Officer), CCO (Chief Commercial Officer) CMO (Chief Marketing Officer),Executive and Senior Vice Presidents plus other senior positions. It is not feasible to provide direct email or telephonenumbers for these people so you will not find these within the directory; to get such information would require theindividuals to volunteer their correct contact information for 3rd party marketing, which is something a senior executivewill not do. (Be wary of any directory claiming to have this data as direct lines change too often to track and a largeproportion of senior managers do not use standard format e-mail addresses, making these impossible to guess.)We aim not to list the same person twice, even though they may manage multiple MNOs across different countries.COVERAGEAfrica: Algeria - Angola - Botswana - Burkina Faso - Burundi - Cameroon - Cape Verde - Central African Republic -Chad - Comores - Congo Brazzaville - Côte dIvoire - Democratic Republic of the Congo - Djibouti - Egypt - EquatorialGuinea - Eritrea - Ethiopia - Gabon - Gambia - Ghana - Guinea-Bissau - Guinea-Conakry - Kenya - Lesotho - Liberia -Libya - Madagascar - Malawi - Mali - Mauritania - Mauritius - Mayotte - Morocco - Mozambique - Namibia - Niger -Nigeria - Réunion - Rwanda - São Tomé and Príncipe - Senegal - Seychelles - Sierra Leone - Somalia - South Africa -Southern Sudan - Sudan - Swaziland - Tanzania - Togo - Tunisia - Uganda - Zambia - ZimbabweRESEARCH PROCESSThe MNO Directory 2012 has been researched in house, lead by Mark Thomas, who has lead all of the research for thedirectory series since 2006 (MNO Directory, MVNO Directory, WiMAX Directory, and the Fixed Line Directory). Other inhouse material has been extracted from Africa & Middle East Telecom week, mainly the subscriber data for this region.The first stage of creating a new edition of the MNO Directory is to verify the list of operators is still valid. Theresearchers use several telecoms news feeds which track global changes. For this edition the researchers examinedarticles from January 2011 to January 2012, adding new operators, removing defunct entries and amending all thosenoted as changing ownership, names or launching new technology. Operators may however choose to actiontechnology or ownership changes without notifying the media.The second stage is the main research stage which may take the form of Internet research or contacting the operatorsdirectly. Every operation is examined individually and updated as best possible. The main sources of information areMNO websites, parent companies, company filings, interim and annual reports, media / press releases, regulator pagesand data, other trade media as well as blogs, conference companies and social networking sites. Where the last 3sources are utilised the researchers have sought to find a secondary source to verify against.During the editing and proofing process the researchers cleanse the data further by removing obvious errors andenriching where possible.Blycroft does not accept liability for any losses resulting from purchasing or using this directory and notes that accuracyof information within the directory is based upon information presented by the operators themselves.
57. The Africa MNO Directory 20122009 547,000 556,000 604,000 642,0002010 662,000 664,000 679,000 726,0002011 678,000 718,000TANZANIA Airtel TanzaniaAirtel Tanzania T: +255-784-103-001Airtel House,Corner of A.H Mwinyi Road & Kawawa RoadKinondoni (+91-11-4666-6100)PO Box 9623Dar-es-Salaam http://africa.airtel.com/tanzania/TanzaniaOwnership Bharti Airtel Limited (60%) | Tanzania Telecommunications Company Limited (40% - State) http://www.airtel.com | http://www.ttcl.co.tzManagement Sam Elangalloor, Managing Director Walingo Chiruyi, Chief Commercial Officer Kalpesh Mehta, Finance Director Perece Kirigiti, Human Resources Director Irene Madeje Mlola, Business Enterprise Director Thierry Diasonama, Network Director Gurunath Rao, IT and Billing Director Beatrice Singano, Director of Regulatory & Corporate Communications Cheikh Sarr, Director of Marketing Charles Desmarquest, Supply Chain Mangement Director David Lema, Legal Counsel Kelvin Twissa, M-Commerce Director Adriana Lyamba, Customer Service DirectorTechnology GSM 900/1800/400 launched November 2001 GPRS active EDGE activeMobile Subscribers Q1 Q2 Q3 Q42008 2,591,345 2,823,000 3,285,000 3,861,0002009 4,104,879 4,435,462 4,763,505 4,910,3592010 4,669,412 4,923,660 5,901,634 6,021,0912011 5,927,417 6,403,965 BOL Mobile TanzaniaBenson Informatics Ltd T: +255-797-123-456Plot 37, Ali Hassan Mwinyi RoadPO Box 78914 (+255-222-666-670)Dar es SalaamTanzania F: +255-797-654-321 http://www.bolmobile.co.tzOwnership Benson Informatics Ltd © Blycroft Ltd, 2012 (www.MNODirectory.com) 88/100
58. The Africa MNO Directory 2012 UMTS 900 launched January 2010, vendor Huawei HSDPA launched January 2009Mobile Subscribers Q1 Q2 Q3 Q42008 4,398,000 4,997,000 5,713,000 6,428,0002009 6,777,000 7,219,000 7,408,000 8,000,9462010 8,431,000 8,722,858 8,459,029 8,721,2492011 9,070,000 9,562,264 Tigo GhanaMillicom Ghana Limited T: +233-27-7555888Millicom PlaceBarnes Road (+352-27-759-101)PMB-TUCAccra F: +233-27-7503999Ghana http://www.tigo.com.ghOwnership Millicom International Cellular, S.A. (100%) http://www.millicom.comManagement Carlos Caceres, Chief Executive Officer Federico Codas, Marketing DirectorTechnology GSM 900 launched July 2002 GPRS active EDGE activeMobile Subscribers Q1 Q2 Q3 Q42008 2,393,782 2,590,209 2,741,122 2,887,9272009 2,875,740 2,896,251 2,959,982 3,094,1762010 3,100,252 3,406,022 3,378,709 3,525,1462011 4,012,322 4,102,156 Vodafone GhanaVodafone Ghana T: +233-(0302)-200200Private Mail Bag 221Accra North F: +233-(0302)-221002Ghana http://www.vodafone.com.ghOwnership Vodafone Group (70%) | State (30%) http://www.vodafone.comManagement Kyle Whitehill, Chief Executive Officer Adrian Moss, Chief Financial Officer Patricia Obo-Nai, Chief Technology Officer Uche Ofodile, Chief Marketing Officer Stella Appiah-Nkansah, Chief Officer, Human Resource Management Marc Norris, Commercial Director Irene Asare, Head of Business Transformation © Blycroft Ltd, 2012 (www.MNODirectory.com) 41/100
59. The Africa MNO Directory 20122008 395,000 421,000 450,000 489,0002009 518,000 547,000 586,000 640,0002010 678,000 722,000 769,000 823,0002011 859,000 904,000LIBERIA Cellcom Liberia LiberiaCellcom Telecommunications Inc. T: +231-7-777-7666Haile Selassie AvenueCapitol Bye-Pass (+231-7-777-7667)MonroviaLiberia http://www.lr.cellcomgsm.comOwnership Cellcom Telecommunications LimitedManagement William Saamoi, Chief Operations OfficerTechnology GSM 900/1800 launched September 2004 GPRS active EDGE active 3G launched May 2011Mobile Subscribers Q1 Q2 Q3 Q42008 250,700 273,263 297,857 303,8142009 319,004 322,195 325,416 327,0442010 330,314 333,287 334,953 336,6282011 336,965 340,166 Comium Liberia LiberiaComium Services BVI (Liberia) T: +231-5-600-600COMIUM Bldg.Congo Town (+961-1-961-000 (Comium))MonroviaLiberia F: +231-5-600-611 http://www.comium.com.lrOwnership Comium Group http://www.comium.comManagement Michael Carroll, Managing Director Chady Slim, Operations Director Fadi Mrad, Finance and Admin Director Bernard Sisay, Commercial Director Abdallah Nassar, Technology DirectorTechnology GSM 900 launched October 2004 © Blycroft Ltd, 2012 (www.MNODirectory.com) 49/100
60. ORDER FORMWays to order INSTANT DOWNLOAD IS AVAILABLE FOR ONLINE ORDERS  You can order online at www.MNODirectory.com (instant download)  Call +44-870-241-4505 and place you order over the phone  Complete the form below and fax to +44-1494-778-994  Alternatively, e-mail firstname.lastname@example.org and ask for an invoice or with any questionsBlycroft Ltd., Registered in England and Wales No. 3666284.Registered Office: 2a Alton House Office Park, Gateway House,Aylesbury, HP19 3XU, UK VAT No. GB 697 9253 64Place a ‘X’ next to the publication you would like to order:The Africa MNO Directory 2012[ ] PDF (Single User) - GBP 135.00[ ] PDF (Multi-User) - GBP 180.00[ ] PDF + Excel (1-10 Users) - GBP 225.00[ ] PDF + Excel (11-20 Users) - GBP 270.00[ ] PDF + Excel (20+ Users) - GBP 315.00The Middle East MNO Directory 2012[ ] PDF (Single User) - GBP 39.00[ ] PDF (Multi-User) - GBP 49.00[ ] PDF + Excel (1-10 Users) - GBP 65.00[ ] PDF + Excel (11-20 Users) - GBP 79.00[ ] PDF + Excel (20+ Users) - GBP 89.00ORDER BOTH AFRICA & THE MIDDLE EAST & SAVE OVER 10%[ ] PDF (Single User) - GBP 149.00[ ] PDF (Multi-User) - GBP 199.00[ ] PDF + Excel (1-10 Users) - GBP 259.00[ ] PDF + Excel (11-20 Users) - GBP 299.00[ ] PDF + Excel (20+ Users) - GBP 349.00 We accept AMEX, MasterCard, VISA & PayPal“Please debit my credit card for my order and send the file(s) to my details below…:”CREDIT CARD NUMBER: __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __EXP: __ __ / __ __ SIGNED:NAMEE-MAILTELEPHONE +COMPANYADDRESS Fax now to +44-1494-778-994, remember you can download instantly if you order online