Cellphone subscriber growth in Africa slows

GROWTH in Africa’s cellphone users is set to slow sharply in the next five years, a study showed yesterday, heralding an end to the boom in an industry that has spurred the continent’s growth.

A report by global industry body GSMA expects subscriber growth to slow to 6 percent between 2015 and 2020 compared with 13 percent 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 a bit surprised by this development because I expected strong growth to continue because the penetration rate in Africa is still well below 100 percent,” Mortimer Hope, GSMA’s Africa director, said.

“One reason for the slowing growth is that some areas, especially in remote, rural communities, are not economically viable for (cellphone) companies to deploy their network.“

By 2020, a little over 500 million people, or just under half the continent’s population, would have subscribed to a mobile service compared with the global average of almost 60 percent, GSMA said in the report.

Cellphones have been one of the factors behind Africa’s recent growth spurt, by freeing people from the 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 was raising the prospect of more consolidation in the region, Hope said. There has already been deal activity in the sector in recent years with Vodacom buying fixedline operator Neotel. – Reuters