What is holding back Africa’s mobile growth?

Africa’s mobile connections may be edging closer to the one-billion mark, but growth in unique mobile subscribers—the number of individuals that have subscribed to a mobile service—will slow down over the next years says a a new a report from GSMA, the international organization of mobile operators and companies.

Africa currently has 367 million unique mobile subscribers, and its fastest growth period for these subscriptions was in the first half of this decade (2010-2015), with an annual growth rate of 13%. The GSMA now expects the growth rate of unique mobile subscribers to slow down to 6% in the second half of the decade (2015-2020).

One of the reasons the GSMA has cited for slow down in growth is “a weak business case for rural network rollout”. According to GSMA mobile users in rural areas generate a low average revenue per user (ARPU) for mobile operators. The costs associated with setting up and maintaining networks in these areas is a barrier for operators wanting to extend their coverage, as it “makes it hard to justify the high costs of network deployment and maintenance in remote communities,” says the GSMA.

Tower sharing as a solution

Rural areas in Africa typically have a lower population density, making it difficult for operators to spread out their coverage. To address the coverage gap, the GSMA recommends (pdf, pg.5) infrastructure sharing as a strategy to extend coverage in rural areas.

In recent years, some of the continent’s leading operators, like MTN, have sold off their tower assets to tower management companies—known as “towercos”—to reduce their running costs. In turn, this has helped operators who may not have the infrastructure in particular areas to take out a tower lease from a towerco, in order to extend network coverage without incurring capital expenditure costs.

With over a quarter of Africa’s estimated 165 000 towers operated by independent tower management companies, tower the GSMA argues that infrastructure sharing could help “provide coverage in areas that would otherwise be uneconomical”.

This article is published in collaboration with Quartz Africa. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Sibusiso Tshabalala is Quartz Africa’s reporter in South Africa.

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