LTE driving the UC mobile operator opportunity in Africa

The growth of LTE in Africa has coincided with a boom in Mobile communications.

With ABI Research predicting the total number of mobile subscribers in Africa will grow to 1.25 billion in the next five years, both mobile operators and handset providers are increasingly paying greater attention to the African market. As African economies continue to prosper and the technology becomes more affordable,mobile operators in Africa are scrambling to adopt next-generation mobile services to boost their revenue. In particular, mobile operators have the opportunity to monetise their LTE investments by offering Unified Communications services to enterprises over LTE.

In the last two years, LTE networks have been launched in a host of African countries, including Zambia, South Africa, Angola, Namibia and Nigeria. Angolan mobile operator Movitel was the first company in Africa to launch commercial LTE last year. Since then, a number of operators in the region including MTN, Zambia’s Zamtel, South Africa’s Cell C and Vodacom have also launched LTE networks. The influx of LTE networks in Africa coupled with the improving economies in most African countries is expected to trigger high demand for LTE-enabled mobile phones and other devices as costs come down.

Currently there are around 200,000 LTE subscribers in Africa, which, according to ABI Research, is set to growth further with a predicted 51.2 million subscribers by the end of 2018. Despite this growth, in a recent interview with Total Telecom, Manoj Kohli, the CEO of MNO Bharti Airtel, said that only a very small number of African operators are making money, which he attributes to the impact of regulatory interference and high taxes. However, this has not deterred African operators from investing heavily in LTE infrastructure, as the market is witnessing strong growth in LTE subscriptions.

As LTE subscriptions penetrate the wider population, we can expect the increase in LTE usage to be replicated in a business environment. Additionally, Enterprises expect their mobile operators to offer a comprehensive set of unified communications services, with a recent report from IDC forecasting the UC opportunity will reach $26 billion by 2016. This combination of factors, presents new revenue opportunities for African mobile operators to offer Unified Communications over LTE.

Across the continent, the speed of LTE adoption is likely to be determined by the availability of LTE-ready handsets. In Africa, smartphone adoption is growing, though feature phones continue to play a key role. The GSMA predicts that in Sub-Saharan Africa alone, the number of smartphone users will grow by 40% year-over-year through 2017. Many of the latest smartphone models are designed with rich content in mind and as such lend themselves to LTE. Growth is likely to be further aided by the fact that a number of leading handset manufacturers is turning to Africa in order to capture market share and increase their overall shipment volume. This year’s Mobile World Congress saw the launch of a number of affordable LTE handsets from a variety of handset providers. Most notably, Mozilla announced that it was working on the world’s fist $25 handset, aimed at the developing world.

The demand for LTE is not necessarily driven by locals’ need for speed, especially as many local users are still relying on lower cost 2G and 3G phones and services. Africa is a popular tourist destination, as tourists arrive with smartphones and expect the same level and quality of mobile service they experience in their home territories.  Roaming agreements and the popular prepaid travel SIM cards could prove to be another lucrative LTE market. For example, Mauritius is a small island country east of Madagascar with a population of 1.2m, but 1m tourists were expected to visit in 2013 – the island was one of the first African countries to launch LTE.

It is now universally recognized that there is a direct economic correlation between levels of Internet penetration and the overall wealth of a region; it goes hand in hand with the accessibility of economic and social opportunities. Mobile networks and eventually LTE also hold the promise to give African users in rural, remote and underprivileged areas the benefits and advantages afforded by high-speed broadband Internet connections. The penetration of the mobile phone is far greater than that of the Internet in Africa, especially in rural areas, making it the most accessible communication tool, according to Jon Gossier, founder and president of Appfrica, a technology company with headquarters in Uganda.

Though a complex opportunity, we will undoubtedly see growth in Africa in not only mobile but also LTE. More operators in Africa are looking to LTE as a technology growth path because it offers a greater variety of service options than earlier mobile technologies As LTE picks up pace in Africa, whilst LTE-ready handsets and operators continue to drive growth, the impact of LTE clearly has the potential to make a major impact on the market. Coupled with the growing demand for mobile unified communications, by offering enterprises a feature rich menu of value added UC services, mobile operators have the opportunity to increase their margins and accelerate their ROI from LTE build outs. The wider global availability of LTE service in the near future will improve the value proposition for Unified Communications, but mobile operators need to stake their claim today by offering these services to its business customers.

Leslie Ferry is the VP of Marketing at BroadSoft.



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