As mobile data is the leading revenue growth area for major operators in Africa, most are expanding the capacity and coverage of their mobile broadband networks to facilitate further growth.
Notably, many African operators are expanding their LTE networks. In March 2018, Nokia said it would carry out one of Africa's largest LTE rollouts as part of a network upgrade deal with Orange covering seven countries on the continent. Vodacom said that in the past year, its operation in South Africa became the first on the continent to provide 80% population coverage with a 4G LTE network. Airtel said that nine of its operations in Africa had launched LTE as of mid-2018.
Several operators are also using LTE for FWB. Telkom South Africa (SA) has more than 500,000 customers using its LTE FWB services. Telkom SA also offers DSL and fiber-based fixed broadband.
The first use case for 5G is for FWB. Comsol, a wholesale provider in South Africa, says it plans to launch commercial 5G-based FWB services in 2019. Vodacom and MTN are also preparing to deploy 5G in South Africa. Vodacom said in August 2018 that it had already launched Africa's first commercial 5G service, for two enterprise customers in Lesotho.
But 3G and, increasingly, LTE will power the growth of mobile broadband in Africa for the coming few years. The number of mobile 3G subscriptions on the continent will rise from 456.6 million at end-2018 to 697.6 million in 2023, according to Ovum forecasts (see Figure 4). LTE subscriptions will increase at a faster rate than 3G subscriptions, with the number of LTE subscriptions in Africa rising from 50.5 million at end-2018 to 271.6 million at end-2023.
Ovum expects mobile 5G services to be launched in Africa by 2021, but the number of mobile 5G subscriptions on the continent will initially be small, rising to 5.9 million at end-2023.
Other technologies are also being used to improve connectivity in Africa. These are not necessarily new: Wi-Fi is playing a growing role, for example. Facebook's Express Wi-Fi hotspot service – part of the social media giant's Internet.org program – has been launched in Nigeria, Kenya, and Tanzania, as well as in India and Indonesia. Express Wi-Fi is run in partnership with local internet service providers (ISPs).
Google also has a Wi-Fi hotspot service, called Google Station, which was launched in Nigeria in mid-2018 and is expected to be available in 200 locations in five Nigerian cities by the end of 2019. Google Station has also been launched in India, Indonesia, Thailand, and Mexico.
More radical approaches to improving connectivity include the plan by Google's sister company Loon to use high-altitude balloons to provide internet connectivity in remote areas. In mid-2018, Loon signed a deal with Telkom Kenya to launch Loon's first commercial service in Africa in 2019. Loon will use its balloons to extend Telkom Kenya's LTE service in suburban and rural areas of Kenya. MTN plans to use systems developed as part of the Facebook-backed Telecom Infra Project to provide mobile network coverage in rural areas in Africa.
Several new subsea cables launched in the past few years have substantially increased connectivity between Africa and the rest of the world. But terrestrial cabling within Africa often remains a bottleneck, so efforts to extend and densify that cabling make an important contribution to improving connectivity.
In July 2018, pan-African fiber provider Liquid Telecom said it had reached an agreement with Telecom Egypt that would give Liquid a terrestrial fiber network stretching from Cairo to Cape Town. CSquared, a company backed by Google, Convergence Partners, Mitsui, and the World Bank, runs wholesale fiber networks in Uganda and Ghana, and plans to launch in other countries.
The cost of access to broadband remains a barrier to take-up for many in Africa. Even though the price of basic smartphones has fallen to around $50, that is still a lot of money for those on low incomes.
Research by the Alliance for Affordable Internet (A4AI), a nonprofit organization, shows that mobile broadband is less affordable in Africa than in the comparable low- and middle-income regions of Asia and Latin America and the Caribbean. In 2017, only four African countries – Egypt, Mauritius, Nigeria, and Tunisia – met A4AI's "1 for 2" target, which is that a 1GB prepaid mobile broadband plan should be priced at 2% or less of average monthly income. The "1 for 2" target has also been adopted by the UN's Broadband Commission. More positively, mobile broadband prices are declining in Africa as well as in the other regions studied by A4AI.
Higher broadband penetration is associated with improved economic growth, and it should be in the interests of the industry and governments to address cost barriers to broadband growth.
MTN first adopted a digital strategy in 2012, and since then it has developed a portfolio of digital services that include e-commerce; MFS; music, video, and gaming services; and IoT and enterprise digital services. MTN's results for 1H18 show that digital services accounted for a little more than 10% of the group's service revenue in the period. Vodacom has a strategy, Vision 2020, which comprises five elements that together are intended to turn the service provider into a leading digital company:
MFS represent the most well-established category of digital services for many African service providers.
Typically, mobile money transfer is the main MFS offering, but many providers are developing other financial services, including payments, insurance, and regular banking services such as deposits and loans. MTN said earlier this year that it aims to become Africa's biggest bank. In the year to end-June 2018, the revenue from MTN's mobile money service increased by 50%, and the service had 24.1 million active users across 14 markets in June 2018.
Mobile money is also the main plank of Orange's digital service strategy in Africa. At end-June 2018, the Orange Money service had 38.7 million customers in Africa and the Middle East, an increase of 29% year on year, though Orange said that 13.6 million were active users, indicating that there is a significant number of occasional or lapsed users.
Mobile money is the most prominent category in Vodacom's digital service portfolio, too.
Vodacom said that 32.3 million customers across its operations (including Safaricom) were using its M-Pesa mobile money service at end-1Q18, an increase of 11.5% year on year. Safaricom accounted for 20.5 million M-Pesa customers.
Access to higher-speed broadband is enabling and encouraging greater use of digital media.
In 2017, Telkom SA launched its own music and video service, LIT, and this is attracting respectable customer numbers and producing business benefits. By March 2018, there were 200,000 subscriptions to the LIT music service and 160,000 subscriptions to the LIT video service, and 20,000 LIT TV boxes had been sold. Additionally, the take-up of bigger data bundles has increased steadily since LIT was launched, Telkom said.
A host of online video services have become active on the continent. Econet Media, a subsidiary of African telecoms, media, and technology (TMT) group Econet, has launched pay-TV and, more recently, OTT video services. The Kwese Play video service was launched in 2017 and operates via a set-top box. In 2018, in partnership with OTT video specialist iflix, Kwese launched the Kwese iflix service, which delivers video to smartphones and tablet computers via an app.
In digital music, the global music streaming service Spotify launched in South Africa in 2018.
South Africa is the most advanced market in Sub-Saharan Africa in machine-to-machine communications (M2M) and IoT services, led by MTN and Vodacom.
Fleet management and vehicle tracking are the most substantial use cases for M2M on the continent, but there are also deployments for healthcare, smart metering, and wildlife tracking.
The transport, health, and utilities verticals all offer potential for continued growth in M2M and IoT, and, increasingly, so will smart home and smart city developments.
Although smart living is generally less advanced in Africa than in other world regions, there are developments underway, such as the Smart Kigali plan to transform the Rwandan capital into a smart city.
Enterprises in Africa still need connectivity, communication tools, and business software – but they are also looking for more sophisticated technology solutions that will help them improve efficiency, reach new markets, and develop new revenues. As a result, there is growing interest in technologies for analytics, automation, and virtualization.
Deployments could include the adoption of IoT for the remote monitoring and management of operations. Enterprises might use CRM and e-commerce systems to develop their digital channels to customers. There are also growth prospects in Africa for data centers, cloud services, and cybersecurity services.
There is an opportunity for established service providers to position themselves as partners to businesses in the development of enterprise digital services. Global players are taking notice too: Both Microsoft and Amazon Web Services are building data centers in South Africa.
As in other major regions, the first use case for 5G in Africa will be for FWB services. That will be followed by eMBB, which will enable high-speed video and augmented reality.
5G FWB and eMBB are based on the first set of 5G standards, which were finalized in mid-2018 but only cover the radio side of the network. The next set of 5G standards, covering the core network, are due to be completed toward the end of 2019 and will have new capabilities, for massive IoT and ultralow latency.
In Africa, these capabilities could enable new 5G services for automation and remote monitoring and management in sectors such as agriculture, health, industry, and smart cities. But it will take some years for 5G technology to mature and achieve significant scale, and for the new use cases that are expected to arise for 5G to develop.
