Although Africa remains the least connected continent in the world, from having 12% of the world’s population and 3% of phone lines at the turn of the millennium, the continent has made significant strides in improving its connectivity. Telecom and tech companies in Africa are reaching new milestones, capitalizing on renewed international investor interest to pour money into infrastructure development, finance the roll-out of data centers, propel fiber connectivity to new areas, and deploy new mobile networks in key markets.

Industry projections estimate the Africa telco sector will grow by $2.24-billion between 2020 and 2024, with longer-term growth expected to be powered by the rollout of high-speed 5G connectivity and a growing suite of complementary services, specifically in the financial services sector. In telco markets across the continent, from Kenya to Ivory Coast to Tanzania and Swaziland, operators rely heavily on dealers or resellers to drive sales and service customer needs. But a lack of digitalisation has left many telcos with little visibility over their B2B channels, creating challenges with inventory management, revenue projections and cost management. 

The African mobile communications market has undergone rapid developments in recent years. Exclusive handsets designed for the market and the increasing popularity of built-in services such as mobile money have led to increased adoption of mobile technology in Africa. While the conditions vary across different countries and regional economic communities, most signs point to mobile technologies facilitating an increasingly connected continent.

A key characteristic of the African mobile communications market is the popularity of certain vendors, some of which are not sold elsewhere. Chinese manufacturer Transsion consistently ships more phones to Africa than any other vendor, accounting for 36.7% of all phones shipped during the first quarter of 2020. Chinese smartphone manufacturers have a stronghold in the marketplace, with Huawei, Oppo, and Xiaomi among the top five most popular vendors.

Africa has been the fastest-growing mobile market in the world for the past five years. According to GSMA, there are more than 489 million mobile users in Africa, with a penetration rate of 43%. Mobile telephony positively and significantly impacts economic growth, which may be twice as large in developing countries as in developed countries. GSMA Intelligence’s report showed that mobile phone subscribers stood at 46% in Sub-Saharan Africa, while smartphone adoption was at 64%. The mobile industry added $170bn to the Sub-Saharan economy in 2023, 8.1% of GDP. GSMA predicts that Africa will have 120 million new mobile subscribers by 2025, taking the total number of subscribers to 615 million (50% of the region’s population). 

The MTN Group is the largest mobile telecommunications provider in the region, operating across borders and in the Middle East. MTN Nigeria’s revenue rose by 21.76% to ₦1.77 trillion in nine months of 2023. MTN Nigeria will increase investments in data revenue after the telecommunication giant saw a slump in its profit after tax for the first nine months of 2023. MTN managed to increase its service revenue in South Africa by 4.1% year-on-year in the third quarter to 31 billion rand. Other key areas of operation include the SEAGHA nations, WECA nations, Syria, Sudan, and other nations in the Middle East and North African region. The MTN Group has more subscribers in Nigeria than any other single country, with 76.7 million subscribers as of April 2023, ahead of the 36.8 million South African subscribers.

The development of the African wireless industry over the past 20 years has been remarkable. The coverage of 3G and 4G networks enabling wireless broadband has been consistently increasing and is projected to approach high deployment by 2030. As of 2023, 3G coverage in Africa stands at 92.46% of the population, comparable to other developing regions, with minimal disparity between North and sub-Saharan Africa (five percentage points). Concurrently, the rollout of 4G reached 80.37% of the entire continent’s population in 2023, with 77.49% coverage in sub-Saharan Africa and 99.23% in North Africa. However, 5G coverage remains nascent, at just 5.05% of the continent’s population in 2023. By 2030, 3G deployment is forecasted to reach 95.93% of the African population, while 4G is expected to attain 87.56%, and 5G is projected to reach 36.84%.

Despite the significant increase in 3G and 4G coverage, as of 2023, 7.5% of the African population still cannot access basic mobile broadband services, such as those delivered through 3G network technology. Additionally, 19.6% of the population cannot access 4G networks, which are necessary for appropriate service quality. Beyond the network’s “supply gap,” the digital divide mainly results from the “demand gap,” which refers to the non-subscribing population residing in areas already served by broadband networks. Wireless broadband adoption, measured by unique mobile broadband subscribers, reached 30.36% in 2023. This indicates a “demand gap” of 62.10%—the portion of the population that could subscribe to mobile broadband but does not, despite being covered by networks. The primary barrier to adoption is limited service affordability. The socioeconomic structure of African countries continues to limit the adoption of technology. Except for Egypt, Morocco, Nigeria, and South Africa, the price of the most economical data-only mobile broadband plan exceeds 2% of the monthly gross income per capita, a target stipulated by the ITU and UNESCO Broadband Commission for Sustainable Development.

Future development of the wireless industry to increase network coverage and continue its modernization path to 5G is constrained by limited capital spending. African wireless operators invest a prorated US$6.27 per capita per year, which is significantly below the world average of US$23.72 and even that of other developing regions, such as Latin America and the Caribbean (US$17.91) and Asia Pacific (US$15.12). Apart from South Africa (US$24.43 per capita) and Morocco (US$15.01), operators in most African countries are constrained in their capacity to invest. This situation highlights the importance of infrastructure sharing to facilitate future network rollout while enabling a reduction in the cost to serve.

As well as growing 5G momentum, other key trends shaping the mobile ecosystem include:

• Artificial intelligence and the opportunity for it to steer growth.
• Improving smartphone access.
• A move towards circular economy principles in light of growing climate concerns.
• The rise of fintech is driving collaboration and innovation across the region.

The high cost of mobile devices and internet connectivity is one of Africa’s key challenges. Internet dispersion in South Africa is 54%, and connectivity costs are among the highest in emerging markets. Such issues narrow the potential market for digital services and slow the adoption of the new reality. The situation will be heightened by a widening gap in digital literacy between the population with access to the internet and the one with lower access.

Some of the continent’s investment in telecommunications has suffered from neglect, under-investment, or destruction resulting from intermittent wars and civil dislocations. In some countries that remain war-torn or politically unstable (in the Horn of Africa and areas such as Libya, the DRC, Cameroon, and Burkina Faso), there are few inducements to extend fixed-line services. Additional difficulties are the absence of reliable electricity and the low use of computers.

The mobile market in Africa is almost entirely prepaid. About 99% of subscribers have prepaid subscriptions since this offers a far more economically manageable means to access voice and data services than a contract plan. In addition, year-on-year, more of the continent’s population can afford mobile services, leading to a steady increase in the subscriber base. Affordability has been extended by the positive effects on pricing from market competition and by measures to reduce termination rates. 

In addition, many countries have signed up for regional agreements to reduce international roaming charges. Regional roaming initiatives reduce customer charges, increase regulated traffic, and curtail grey traffic (the re-origination of long-distance calls). The East Africa One Network Area has been in effect since April 2016, while the Economic Community of West African States (ECOWAS) came into play in December 2016. The Common Market for Eastern and Southern Africa (COMESA) provides a similar agreement (signed in October 2017) among its 19-member bloc stretching from Libya in the north to Eswatini (Swaziland) in the south.

While network operators have seen reduced revenue from roaming access, this has generally been recouped from a sharp increase in international traffic. A few African countries retain incumbent monopolies for the provision of services. In contrast, others have seen consolidation among players (largely due to operators such as Airtel and Tigo leaving certain markets or the failure of some poorly managed enterprises). In sum, though, there is effective competition within the mobile sector across the region. This has also encouraged competition for services based on upgraded technologies, encouraging investment. 

Africa remains the main region globally for m-money and m-banking services. Kenya is ramping up its use of technology platforms offered by Vodafone Group’s M-Pesa, Airtel Kenya, and Telkom Kenya since the pandemic to disburse aid directly to businesses and individuals using mobile money rather than through banks or food parcels. Pioneered by Vodafone’s Nairobi-based Safaricom in 2007, mobile money has become an indispensable part of how Africa’s population of 1.4 billion pay for goods and services, buy a health cover or borrow money without a smartphone. 

Given this robust evidence, it is important for African countries—governments and regulators alike—to support the development of the independent tower industry. The growth of this sector is contingent upon several regulatory and public policy initiatives. In other words, regulatory and policy variables play a crucial role in the development of the independent tower company sector, beyond the willingness of the private sector to invest. These initiatives can facilitate investment leverage and provide returns to both the public and private sectors.