Mobile Word Congress - Ministerial Program 2012 Opportunities …€¦ · 731 (10%) 510 819 388 (5%) 492 3,548 734 2011 6,524 642 (10%) 465 766 361 (5%) 440 3,200 680 2015F 5,835

Barcelona, 28 February 2012

Opportunities in Africa and Middle EastMobile Word Congress - Ministerial Program 2012

Marc Biosca – Vice President & Partner Leader of A.T. Kearney Telecom Practice in the Middle East and Africa

A.T. Kearney 28/02.2012 MWC 2Source: Wireless Intelligence. Excludes M2M connections

The African mobile market is thriving, reaching over 642 Bnconnections in 2011 – after exceeding 65% penetration in 2011

ConnectionsPenetration

85%82%

78%73%

9%6%4%3%2%

0

100

200

300

400

500

600

700

800

900

1,000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%Penetration rate (%

)

Con

nect

ions

(mill

ion)

2011

379

40%

642

2007

283

65%

31%

2006 2010

201

22% 552

2005

136

57%

15%

2004 2009

83

458

2003

53

48%

2002 2008

37

2001

26

+30%

2015F

910

2014F

860

2013F

807

2012F

735

2000

17

Total African Mobile Connections, Penetration Rate and growth drivers (million, % penetration)

■ Economic development in the region

■ Success of cost-effective pre-paid services (96% of total) and significant price reductions

■ Introduction of low-cost handsets

■ Ambitious rollout of mobile network infrastructure – fast expansion of mobile coverage

A.T. Kearney 28/02.2012 MWC 3

Over the next 5 years Africa will be the second fastest growing region in total connections and the fastest growing in subscribers

Global Mobile Connections by Region(million)

709

4,424

894

2014F

8,484

887(10%)

607

947

434(5%)

631

4,154

845

2013F

7,840

815(10%)

555

876

413(5%)

555

3,861

790

2012F

7,194

731(10%)

510

819

388(5%)

492

3,548

734

2011

6,524

642(10%)

465766

361(5%)

440

3,200

680

2015F

5,835

552(9%)

424722

333(5%)

389

2010

627

299(5%)

9,082

949(10%)

656

1,015

2,823

AfricaOthersEEANA

APACLATAM

ME

1) Includes M2M and mobile connectionsSource: Wireless Intelligence

7%

8%

13%7%7%9%

10%

CAGR11-15

A.T. Kearney 28/02.2012 MWC 4Notes: 25 countries in AfricaSource: Wireless Intelligence. Excluses M2M connections

Country 2011 connections %

Nigeria NGA 89,343,017 14%Egypt EGY 80,616,921 13%South Africa ZAF 59,474,500 10%Algeria ALG 36,741,368 6%Morocco MAR 36,522,899 6%Kenya KEN 26,135,115 4%Sudan SDN 24,628,765 4%Tanzania TZA 23,334,395 4%Ghana GHA 20,049,412 3%Cote d'Ivoire CIV 17,991,035 3%Uganda UGA 14,754,199 2%DR Congo COD 14,098,685 2%Tunisia TUN 12,254,728 2%Ethiopia ETH 11,902,288 2%Libya LBY 11,158,560 2%Angola AGO 10,797,078 2%Cameroon CMR 10,658,991 2%Mali MLI 10,000,229 2%Senegal SEN 9,686,372 2%Zimbabwe ZWE 8,281,749 1%Benin BEN 7,996,577 1%Mozambique MOZ 7,750,845 1%Burkina Faso BFA 6,740,148 1%Zambia ZMB 6,544,630 1%Madagascar MDG 6,147,499 1%Other (29 countries) 56,190,285 9%

Africa 25 and total mobile connections(2011)

Africa 25 represent >91% of total African connections in 2011

• Africa 25 countries represent >91% of total African connections


Mobile Industry in Africa contributes to US$56Bn of the regional economy (employs 5 million(2)) – equivalent to 3.5% of total GDP

0.7%0.7%

1.9%2.1%

2.1%2.2%2.3%

2.7%2.7%

2.9%2.9%

3.4%3.5%3.5%

3.7%3.7%3.7%

3.8%3.8%

4.1%4.2%4.2%

5.7%6.0%

MNO revenues as % of GDP

Sudan*Ethiopia*Algeria

MadagascarMozambique

EgyptAngolaUganda

Burkina FasoTunisiaLibya*

CameroonSouth Africa

MoroccoNigeriaZambia

TanzaniaBenin*GhanaDRCMali

KenyaCote d’Ivoire

Senegal

4.1%7.5%

0.8%6.7%

5.8%1.6%

3.3%5.0%

5.8%

5.0%

3.3%5.0%5.0%

1.6%2.4%

7.5%3.3%3.3%

0.8%2.4%

Potential increase to GDP(1)

1Potential increase in GDP from raising mobile penetration rates to 100% based on 2008 World Bank economic study that showed that a 10% increase in penetration has a 0.81% increase to GDP (2) Included direct and indirect employment creation

Zimbabwe has been removed due to the difficulty in obtaining a reliable measure of GDP, NA – indicates countries where penetration is above 100% and a potential increase to GDP cannot be calculated, * indicates countries with extrapolated MNO revenues

Source: Wireless Intelligence; EIU; Qiang 2008; A.T. Kearney research and analysis

NANA

NANA

Reaching 100% penetration would result

into an additional US$35Bn equivalent to

2% of GDP


4 main catalysts will continue driving further growth in Africa

Continue expanding service reach

• Service coverage, expanding to new areas (today 36% of population in Africa 25 countries don’t have mobile connectivity)

• Affordability of service access (e.g. handsets) and usage

Drive Broadband connectivity

Enable innovative mobile services and ICT development

• Rollout of 3G and 4G mobile networks• Investments in terrestrial backbones, submarine cables and

satellite capacity to fulfill future needs and reduce transmission and backhauling costs

• Introduction of low-cost smart-phones and tablets

• Continue the development of innovative mobile services– m-Agri, m-payment, m-banking, m-education, m-health, m-

woman, etc.• Active promotion of ICT development

Main growth catalysts

Selection

Source: A.T. Kearney


Broadband will be the next growth catalyst bringing substantial benefits to African socio-economic development

232.9

162.7

101.1

57.830.3

15.39.25.41.10.2

20072006 2011F

+458%

+67%

2015F2014F2013F2012F201020092008

(1) Based on mobile broadband subscriptions using W-CDMA (HSPA) or CDMA1x EV-DO (Rev A) technology and excludes GPRS/EDGE(2) Connections at Q4 each year based on technology including CDMA 2000 1xEV-DO (Rev. A and Rev. B also), WCDMA HSPA and LTESource: Wireless Intelligence, Informa, ITU, EIU, A.T. Kearney analysis

Mobile Broadband connections in Africa (million)

■ Safaricom (Kenya), data services revenues (incl. SMS) represent today 26% of total revenues• Combination of broadband

coverage and value added services (e.g. m-payments) being main adoption catalyzers

■ Mobile broadband connections expected to grow at a 67% in the next 4 years

0.5

SDN

0.4 0.2B

EN0.3

ZIM

0.3

MO

Z

0.4

CO

D

0.0

MLI

0.0

ETH

0.0

CIV

0.0

BU

R

0.1

MA

D

0.1

TZA

0.1

UG

A

0.1

ZAM

0.1C

MR

1.5

2.8

TUN

4.6

4.6

ZAF

7.5

1.5

6.0

1.2

1.7

MA

R

4.3G

HA

0.80.6

KEN

0.90.9

SEN

1.1

0.6

NG

A

1.1

1.1

AG

O

1.6

1.5

EGY

2.4

1.7

0.7

ALG

2.5

2.5

LBY

2.9Fixed broadbandMobile broadband

Estimated fixed and mobile broadband penetration in the A25 countries (%)


Example 1: m-PesaExample 1: m-Pesa

Innovative mobile services and proactive ICT development will be key growth and value enablersAfrican mobile VAS and ICT growth stories

■ Mobile operators have driven the emergence of a unique industry in innovative mobile VAS to enable and promote agriculture, banking, education, and health in Africa• Mobile Money Transfers and m-banking puts Africa at the forefront of the global Mobile Money industry

■ICT sector is being prioritized by African governments as a key driver for development

Selection

mPesa in Kenya enables its users to deposit and withdraw money, transfer money to other users and non-users, pay bills, and purchase airtime

2.93

0.37

11.78

2010 2011

+217%

7.56

20092008

13.80

9.486.18

2.08

+88%

2011201020092008

Example 2: Egypt ICTExample 2: Egypt ICT

The Egyptian Government mandated the Ministry of Communications and Information Technology (MCIT) to be devoted entirely to ICT development

3,8893,431

2,907

+16%

201020092008

Sources: Safaricom Ltd Annual Results FY2011, Egypt MICT Publications – Monthly Reports Dec09 and Dec10

205

181175

+8%

201020092008

ICT Companies

Employees in ICT sectorThousands

RevenueKshs Billion

UsersMillion

% of total Revenues 12.4%


Governments’ role is key to continue the growth story and extend the benefits that the mobile industry is bringing to Africa

Main areas of focus for policy makers and regulators

Spectrum• African governments need to make new spectrum available to

support additional growth and broadband deployment– Allocating the Digital Dividend. Coverage including coverage bands

(700-900MHz) and capacity bands (1800-3500 MHz)

Taxation

Infrastructure sharing

Consolidation

• Governments can increase tax intake by reducing specific taxes– Major control on use of Universal Access funds– Avoid over taxation to handsets

• Infrastructure sharing is key to expand service coverage and increase penetration while reducing CapEx and OpEx

• Operators consolidation in some markets can generate stimulus for additional investments in infrastructure and ensuring sustainability of remaining market players

Promotion of ICT development programs

• African governments and the mobile industry must continue to work together in partnership to bring the benefits of the African continent’s ICT development goals

Source: A.T. Kearney


Additional spectrum needs to be made available at reasonable prices to enable further growth

150 142120

140 110 153150

7348

314 325

285

229215

16

70155

80

Tunisia

220

70

Nigeria

273

40

China

395

70

Hong Kong

434

65

United States

513

108

Sweden

585

118

Germany

594

13050

Cote d’Ivoire

3620

Uganda

98

50

South Africa

204

62

Morocco

205

700-900MHz1800-1900MHz2.1-2.6GHz

Spectrum licensed in selected African and non-African countries (MHz)

■ Prices for 3G licenses have varied considerably

• $1.8Bn in Egypt ($0.37/MHz/population) vs. $45m in Kenya ($0.02/MHz/population) this is 18 times more expensive

■ Governments need to consider the trade off between

• Maximizing up-front government revenues and…

• …social benefits of operators investing in network coverage and new service

Source: GSMA – National regulators


Governments can increase tax intake by reducing specific taxes, while increasing socio-economic benefits

Source: GSMA – The Impact of Taxation on the Development of the Mobile Broadband Sector

Approach to taxation of selected African countries

■ Government taxation policy will have a strong influence on the mobile industry ability to contribute to economic growth • Reasonable

charges for license fees

• Avoid excessive service charges

• Major control on use of Universal Access funds

• Avoid over taxation of handsets

A.T. Kearney 28/02.2012 MWC 12Source: Wireless Intelligence, A.T. Kearney analysis

1

2222

3333333333

44

55555

6

7

9

BFAMDGZWEZMBSEN MLI MOZSDN ETHUGATZANGA CMRTUNALGMAREGYKENZAFBENCOD AGO LBYGHACIV

Number of wireless operators in A25 markets(2010)

■ Operators’ collaboration in infrastructure sharing is key to expand service coverage and increase penetration while reducing CapEx and OpEx• Cost advantages of up to 50-60%

on network costs

■ In some markets, operators consolidation seems a natural evolution to protect industry health

Policy makers and regulators need to be open to collaboration among operators – promoting infrastructure sharing and allowing selective market consolidation


Americas AtlantaCalgary

Chicago Dallas

DetroitHouston

Mexico CityNew York

San FranciscoSão Paolo

TorontoWashington, D.C.

Asia Pacific BangkokBeijing

Hong KongJakarta

Kuala LumpurMelbourne

MumbaiNew Delhi

SeoulShanghai

SingaporeSydney

Tokyo

Europe Amsterdam Berlin BrusselsBucharest

BudapestCopenhagenDüsseldorfFrankfurt

HelsinkiIstanbulKievLisbon

LjubljanaLondonMadridMilan

MoscowMunichOsloParis

PragueRomeStockholmStuttgart

ViennaWarsawZurich

Middle East and Africa

Abu DhabiDubai

JohannesburgManama

Riyadh

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Mobile Word Congress - Ministerial Program 2012 Opportunities …€¦ · 731 (10%) 510 819 388 (5%) 492 3,548 734 2011 6,524 642 (10%) 465 766 361 (5%) 440 3,200 680 2015F 5,835

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