Barcelona, 28 February 2012
Opportunities in Africa and Middle EastMobile Word Congress - Ministerial Program 2012
Marc Biosca – Vice President & Partner Leader of A.T. Kearney Telecom Practice in the Middle East and Africa
A.T. Kearney 28/02.2012 MWC 2Source: Wireless Intelligence. Excludes M2M connections
The African mobile market is thriving, reaching over 642 Bnconnections in 2011 – after exceeding 65% penetration in 2011
ConnectionsPenetration
85%82%
78%73%
9%6%4%3%2%
0
100
200
300
400
500
600
700
800
900
1,000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%Penetration rate (%
)
Con
nect
ions
(mill
ion)
2011
379
40%
642
2007
283
65%
31%
2006 2010
201
22% 552
2005
136
57%
15%
2004 2009
83
458
2003
53
48%
2002 2008
37
2001
26
+30%
2015F
910
2014F
860
2013F
807
2012F
735
2000
17
Total African Mobile Connections, Penetration Rate and growth drivers (million, % penetration)
■ Economic development in the region
■ Success of cost-effective pre-paid services (96% of total) and significant price reductions
■ Introduction of low-cost handsets
■ Ambitious rollout of mobile network infrastructure – fast expansion of mobile coverage
A.T. Kearney 28/02.2012 MWC 3
Over the next 5 years Africa will be the second fastest growing region in total connections and the fastest growing in subscribers
Global Mobile Connections by Region(million)
709
4,424
894
2014F
8,484
887(10%)
607
947
434(5%)
631
4,154
845
2013F
7,840
815(10%)
555
876
413(5%)
555
3,861
790
2012F
7,194
731(10%)
510
819
388(5%)
492
3,548
734
2011
6,524
642(10%)
465766
361(5%)
440
3,200
680
2015F
5,835
552(9%)
424722
333(5%)
389
2010
627
299(5%)
9,082
949(10%)
656
1,015
2,823
AfricaOthersEEANA
APACLATAM
ME
1) Includes M2M and mobile connectionsSource: Wireless Intelligence
7%
8%
13%7%7%9%
10%
CAGR11-15
A.T. Kearney 28/02.2012 MWC 4Notes: 25 countries in AfricaSource: Wireless Intelligence. Excluses M2M connections
Country 2011 connections %
Nigeria NGA 89,343,017 14%Egypt EGY 80,616,921 13%South Africa ZAF 59,474,500 10%Algeria ALG 36,741,368 6%Morocco MAR 36,522,899 6%Kenya KEN 26,135,115 4%Sudan SDN 24,628,765 4%Tanzania TZA 23,334,395 4%Ghana GHA 20,049,412 3%Cote d'Ivoire CIV 17,991,035 3%Uganda UGA 14,754,199 2%DR Congo COD 14,098,685 2%Tunisia TUN 12,254,728 2%Ethiopia ETH 11,902,288 2%Libya LBY 11,158,560 2%Angola AGO 10,797,078 2%Cameroon CMR 10,658,991 2%Mali MLI 10,000,229 2%Senegal SEN 9,686,372 2%Zimbabwe ZWE 8,281,749 1%Benin BEN 7,996,577 1%Mozambique MOZ 7,750,845 1%Burkina Faso BFA 6,740,148 1%Zambia ZMB 6,544,630 1%Madagascar MDG 6,147,499 1%Other (29 countries) 56,190,285 9%
Africa 25 and total mobile connections(2011)
Africa 25 represent >91% of total African connections in 2011
• Africa 25 countries represent >91% of total African connections
A.T. Kearney 28/02.2012 MWC 5
Mobile Industry in Africa contributes to US$56Bn of the regional economy (employs 5 million(2)) – equivalent to 3.5% of total GDP
0.7%0.7%
1.9%2.1%
2.1%2.2%2.3%
2.7%2.7%
2.9%2.9%
3.4%3.5%3.5%
3.7%3.7%3.7%
3.8%3.8%
4.1%4.2%4.2%
5.7%6.0%
MNO revenues as % of GDP
Sudan*Ethiopia*Algeria
MadagascarMozambique
EgyptAngolaUganda
Burkina FasoTunisiaLibya*
CameroonSouth Africa
MoroccoNigeriaZambia
TanzaniaBenin*GhanaDRCMali
KenyaCote d’Ivoire
Senegal
4.1%7.5%
0.8%6.7%
5.8%1.6%
3.3%5.0%
5.8%
5.0%
3.3%5.0%5.0%
1.6%2.4%
7.5%3.3%3.3%
0.8%2.4%
Potential increase to GDP(1)
1Potential increase in GDP from raising mobile penetration rates to 100% based on 2008 World Bank economic study that showed that a 10% increase in penetration has a 0.81% increase to GDP (2) Included direct and indirect employment creation
Zimbabwe has been removed due to the difficulty in obtaining a reliable measure of GDP, NA – indicates countries where penetration is above 100% and a potential increase to GDP cannot be calculated, * indicates countries with extrapolated MNO revenues
Source: Wireless Intelligence; EIU; Qiang 2008; A.T. Kearney research and analysis
NANA
NANA
Reaching 100% penetration would result
into an additional US$35Bn equivalent to
2% of GDP
A.T. Kearney 28/02.2012 MWC 6
4 main catalysts will continue driving further growth in Africa
Continue expanding service reach
• Service coverage, expanding to new areas (today 36% of population in Africa 25 countries don’t have mobile connectivity)
• Affordability of service access (e.g. handsets) and usage
Drive Broadband connectivity
Enable innovative mobile services and ICT development
• Rollout of 3G and 4G mobile networks• Investments in terrestrial backbones, submarine cables and
satellite capacity to fulfill future needs and reduce transmission and backhauling costs
• Introduction of low-cost smart-phones and tablets
• Continue the development of innovative mobile services– m-Agri, m-payment, m-banking, m-education, m-health, m-
woman, etc.• Active promotion of ICT development
Main growth catalysts
Selection
Source: A.T. Kearney
A.T. Kearney 28/02.2012 MWC 7
Broadband will be the next growth catalyst bringing substantial benefits to African socio-economic development
232.9
162.7
101.1
57.830.3
15.39.25.41.10.2
20072006 2011F
+458%
+67%
2015F2014F2013F2012F201020092008
(1) Based on mobile broadband subscriptions using W-CDMA (HSPA) or CDMA1x EV-DO (Rev A) technology and excludes GPRS/EDGE(2) Connections at Q4 each year based on technology including CDMA 2000 1xEV-DO (Rev. A and Rev. B also), WCDMA HSPA and LTESource: Wireless Intelligence, Informa, ITU, EIU, A.T. Kearney analysis
Mobile Broadband connections in Africa (million)
■ Safaricom (Kenya), data services revenues (incl. SMS) represent today 26% of total revenues• Combination of broadband
coverage and value added services (e.g. m-payments) being main adoption catalyzers
■ Mobile broadband connections expected to grow at a 67% in the next 4 years
0.5
SDN
0.4 0.2B
EN0.3
ZIM
0.3
MO
Z
0.4
CO
D
0.0
MLI
0.0
ETH
0.0
CIV
0.0
BU
R
0.1
MA
D
0.1
TZA
0.1
UG
A
0.1
ZAM
0.1C
MR
1.5
2.8
TUN
4.6
4.6
ZAF
7.5
1.5
6.0
1.2
1.7
MA
R
4.3G
HA
0.80.6
KEN
0.90.9
SEN
1.1
0.6
NG
A
1.1
1.1
AG
O
1.6
1.5
EGY
2.4
1.7
0.7
ALG
2.5
2.5
LBY
2.9Fixed broadbandMobile broadband
Estimated fixed and mobile broadband penetration in the A25 countries (%)
A.T. Kearney 28/02.2012 MWC 8
Example 1: m-PesaExample 1: m-Pesa
Innovative mobile services and proactive ICT development will be key growth and value enablersAfrican mobile VAS and ICT growth stories
■ Mobile operators have driven the emergence of a unique industry in innovative mobile VAS to enable and promote agriculture, banking, education, and health in Africa• Mobile Money Transfers and m-banking puts Africa at the forefront of the global Mobile Money industry
■ICT sector is being prioritized by African governments as a key driver for development
Selection
mPesa in Kenya enables its users to deposit and withdraw money, transfer money to other users and non-users, pay bills, and purchase airtime
2.93
0.37
11.78
2010 2011
+217%
7.56
20092008
13.80
9.486.18
2.08
+88%
2011201020092008
Example 2: Egypt ICTExample 2: Egypt ICT
The Egyptian Government mandated the Ministry of Communications and Information Technology (MCIT) to be devoted entirely to ICT development
3,8893,431
2,907
+16%
201020092008
Sources: Safaricom Ltd Annual Results FY2011, Egypt MICT Publications – Monthly Reports Dec09 and Dec10
205
181175
+8%
201020092008
ICT Companies
Employees in ICT sectorThousands
RevenueKshs Billion
UsersMillion
% of total Revenues 12.4%
A.T. Kearney 28/02.2012 MWC 9
Governments’ role is key to continue the growth story and extend the benefits that the mobile industry is bringing to Africa
Main areas of focus for policy makers and regulators
Spectrum• African governments need to make new spectrum available to
support additional growth and broadband deployment– Allocating the Digital Dividend. Coverage including coverage bands
(700-900MHz) and capacity bands (1800-3500 MHz)
Taxation
Infrastructure sharing
Consolidation
• Governments can increase tax intake by reducing specific taxes– Major control on use of Universal Access funds– Avoid over taxation to handsets
• Infrastructure sharing is key to expand service coverage and increase penetration while reducing CapEx and OpEx
• Operators consolidation in some markets can generate stimulus for additional investments in infrastructure and ensuring sustainability of remaining market players
Promotion of ICT development programs
• African governments and the mobile industry must continue to work together in partnership to bring the benefits of the African continent’s ICT development goals
Source: A.T. Kearney
A.T. Kearney 28/02.2012 MWC 10
Additional spectrum needs to be made available at reasonable prices to enable further growth
150 142120
140 110 153150
7348
314 325
285
229215
16
70155
80
Tunisia
220
70
Nigeria
273
40
China
395
70
Hong Kong
434
65
United States
513
108
Sweden
585
118
Germany
594
13050
Cote d’Ivoire
3620
Uganda
98
50
South Africa
204
62
Morocco
205
700-900MHz1800-1900MHz2.1-2.6GHz
Spectrum licensed in selected African and non-African countries (MHz)
■ Prices for 3G licenses have varied considerably
• $1.8Bn in Egypt ($0.37/MHz/population) vs. $45m in Kenya ($0.02/MHz/population) this is 18 times more expensive
■ Governments need to consider the trade off between
• Maximizing up-front government revenues and…
• …social benefits of operators investing in network coverage and new service
Source: GSMA – National regulators
A.T. Kearney 28/02.2012 MWC 11
Governments can increase tax intake by reducing specific taxes, while increasing socio-economic benefits
Source: GSMA – The Impact of Taxation on the Development of the Mobile Broadband Sector
Approach to taxation of selected African countries
■ Government taxation policy will have a strong influence on the mobile industry ability to contribute to economic growth • Reasonable
charges for license fees
• Avoid excessive service charges
• Major control on use of Universal Access funds
• Avoid over taxation of handsets
A.T. Kearney 28/02.2012 MWC 12Source: Wireless Intelligence, A.T. Kearney analysis
1
2222
3333333333
44
55555
6
7
9
BFAMDGZWEZMBSEN MLI MOZSDN ETHUGATZANGA CMRTUNALGMAREGYKENZAFBENCOD AGO LBYGHACIV
Number of wireless operators in A25 markets(2010)
■ Operators’ collaboration in infrastructure sharing is key to expand service coverage and increase penetration while reducing CapEx and OpEx• Cost advantages of up to 50-60%
on network costs
■ In some markets, operators consolidation seems a natural evolution to protect industry health
Policy makers and regulators need to be open to collaboration among operators – promoting infrastructure sharing and allowing selective market consolidation
A.T. Kearney 28/02.2012 MWC 13
Americas AtlantaCalgary
Chicago Dallas
DetroitHouston
Mexico CityNew York
San FranciscoSão Paolo
TorontoWashington, D.C.
Asia Pacific BangkokBeijing
Hong KongJakarta
Kuala LumpurMelbourne
MumbaiNew Delhi
SeoulShanghai
SingaporeSydney
Tokyo
Europe Amsterdam Berlin BrusselsBucharest
BudapestCopenhagenDüsseldorfFrankfurt
HelsinkiIstanbulKievLisbon
LjubljanaLondonMadridMilan
MoscowMunichOsloParis
PragueRomeStockholmStuttgart
ViennaWarsawZurich
Middle East and Africa
Abu DhabiDubai
JohannesburgManama
Riyadh
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