Cellphone growth slows

Growth in Africa’s mobile phone users is set to slow sharply in the next five years, a study has shown, heralding an end to the boom in an industry that has spurred the continent’s growth.

Reuters Africa reports that a report by global industry body GSMA expects subscriber growth to slow to 6% between 2015-2020 compared with 13% growth in the first half of the decade, citing lack of commercial logic in setting up network coverage in some rural areas, where more than half of the population lives.

“I am bit surprised by this development because I expected strong growth to continue because the penetration rate in Africa is still well below 100%,’’ Mortimer Hope, GSMA’s Africa director, is quoted in the report as saying. “One reason for the slowing growth is that some areas especially in remote, rural communities are not economically viable for mobile phone companies to deploy their network because of the low spending power of people living there.”

The report says mobile phones have been one of the factors behind Africa’s recent growth spurt, by freeing people from the shackles of the continent’s awful landline infrastructure and allowing them to communicate and transact at low cost.

While relatively low penetration rates suggested significant growth potential in most markets, the negative impact of increasing competition on profit margins is raising the prospect of more consolidation in the region, Hope said.

This has not stopped Vietnam’s ambitious state-run telecoms operator Viettel launching mobile and internet services in Tanzania after investing $736m in East Africa’s second-biggest economy. Reuters Africa reports that Tanzania’s mobile telecoms sector has grown rapidly over the past decade, driven by demand for third-generation (3G) mobile services.

The number of mobile phone subscribers in Tanzania rose by 16% in 2014 to 31.86m, according to the country’s telecoms regulator.

A statement issued by Viettel, which is run by Vietnam’s Ministry of Defence, said the company will trade as Halotel in Tanzania and would offer both 2G and 3G services. ‘With an initial investment of $736m … Viettel’s operations have enabled services to all 26 regions in the country across rural and urban areas,’ it said. ‘Viettel’s new investment in Africa follows the rollout of services in Burundi and Cameroon … earlier this year and in Mozambique … in 2014.’ – Reuters Africa.