Global smartphone adoption
will continue to be driven by emerging economies predominantly China, India and
Africa
Globally,
there are now around 1 billion smartphones. Smartphone adoption had rapidly
grown reaching 700 million by 2011 before hitting one billion in 2013. This
growth is expected to continue driven by the emerging economies of China, India
and Africa.
Thomas Demolliens, Head of Telecom Sales, Lumata |
Current
estimates put smartphone penetration in Africa at 7%; however, it is expected
to hit 40 per cent by 2017. This rapid growth can be attributed to an increase
in mobile infrastructure coupled with the growth in Africa’s middle class who
now account for 34.3 per cent of the population.
This
emerging middle class has benefited from increased competition in the region
from new smartphone manufacturers such as ZTE and Huawei. Both of whom have
introduced smartphones for less than $100 to rival those offerings from
traditional players such as Nokia and Samsung. This has lowered the barrier to
entry for many Africans and heavily contributed to rates of adoption. This is
particularly evident in Nigeria and Egypt where smartphone penetration stands
at 25 per cent and 22 per cent respectively.
This rapid adoption of
smartphones has led to an explosion in mobile internet access and data use
Due to
the lack of fixed broadband services, mobile is the primary channel most
Africans access the internet with, the continent now possessing 84 million
internet enabled devices.
Broadband
access is fundamental to economic growth with current figures estimating that a
10 per cent increase in broadband access can lead to 1.3 per cent growth in
terms of GDP. This is through its role in the enablement of key areas such as education,
healthcare, banking and commerce.
Ghana has the highest levels of mobile
broadband on the continent with 33 per cent penetration, while in urban Kenya,
95 per cent of mobile subscribers own an internet enabled device. According to
the International Telecommunications Union (ITU), Zimbabwe ranks second in
Africa after Ghana for its mobile data usage rates. Zimbabwe’s mobile data
penetration rates stand at 29.7%, according to the ITU.
While
these figures are currently comparatively low to other regions, the growth in
internet enabled devices will continue at a faster pace than other continents
due to there being a higher number of young consumers. These consumers display
similar behaviours to their Western counterparts; for example, 57
per cent visit social networks and 38 per cent listen to music or watch videos
on their device. This growth in demand for services, dependent on mobile
broadband, represents the single biggest revenue growth opportunity for
operators on the continent.
In the
short term, the demand for increased mobile data will be met by 3G services
(with which many African operators already face a significant challenge in
terms of development and adoption) and Wi-Fi. While the commercial roll out of
LTE is on the horizon, to date, only a few countries, including Namibia, Angola
and South Africa have launched LTE commercial services. This is as a result of
the prohibitive cost of LTE devices, regulatory challenges, lack of spectrum,
insufficient content and slow return on investment for existing 3G roll outs.
Key to increasing ARPU and
offsetting the decline in traditional revenues will be finding ways to drive
competitive differentiation of data services
Although
mobile subscriptions are increasing, ARPU is declining. This is due to the
increase in levels of competition for traditional services such as text and
voice, with the latter currently making up 70 per cent of revenues for African
operators. In order to offset this decline, operators need to diversify into
other high revenue services. The most obvious of which is data to cater for the
growing needs of increasingly mobile savvy African consumers. However, as was
the way with traditional services, competition will be fierce, leading to a
depression of prices and by extension revenues.
In order
to succeed, it is vital that operators find a way to drive competitive
differentiation as a way of increasing uptake of these services. Key to achieving this will be through the
offering of targeted data plans to different customer segments, coupled with
personalised real-time offers, and underpinned by user data such as usage behaviour,
device type, location and content consumption habits.
For
example, producing a targeted campaign offering free data trial valid for one week
could be very appealing to a subscriber as they get to enjoy the experience of mobile
internet, accessing original content, social media and apps via their new
smartphone. A timely follow-up campaign can then be automatically triggered to
present the subscriber with a highly personalised data offer that they can
redeem on the spot or later if more convenient.
Operators
need to not only be very selective in how they use the vast amounts of consumer
data they have access to, but also be very flexible and agile in their approach
to best meet their customers’ needs. Undeniably, this agility requires smart, cutting-edge
technology and the good news is that a number of operators are already driving
innovative campaigns, reaching their goals of increasing take-up of new
services and generating new revenue streams; paving the way to the adoption of
mobile data usage on a massive scale in Africa.
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