Nigeria now the biggest market in Africa – but rural penetration lags

Details: James Barton; Category: Trends & Forecasts; 22 May 2012; 8997 views

Nigeria has overtaken South Africa to become the continent’s largest mobile market with now over 90 million subscribers, and yet market penetration stands at only around 60% in early 2012...

Nigeria has overtaken South Africa to become the continent’s largest mobile market with now over 90 million subscribers, and yet market penetration stands at only around 60% in early 2012. The telecommunications sector as a whole accounts for only around 5.6% of the country's GDP, compared with 10% for South Africa, according to Research & Markets.

Subscriber growth had slowed significantly during the global economic crisis, re-accelerated in 2010 but then slowed again in 2011. Much of the remaining addressable market is in the country’s rural areas where network rollouts and operations are expensive.

This in combination with declining ARPU levels is forcing the networks to streamline their operations and to develop new revenue streams from services such as third generation (3G) mobile broadband, mobile payments/banking, and others. At the same time the operators are rolling out national fibre backbone networks to support the ever increasing demand for bandwidth. At least two operators are rolling out fourth generation (4G) LTE networks.

How difficult it is to succeed in Nigeria’s highly competitive mobile market became evident with the spectacular failure of Multi-Links in 2011, in which seasoned heavyweight Telkom South Africa lost almost its entire investment.

The number of mobile-phone subscriptions increased from fewer than 1m in 2001 to 94.4m by end-2011. However, the fixed-line market has been hampered by underinvestment in the infrastructure and operations of Nitel, the former state telecoms monopoly, and there were only 833,000 active fixed lines at end-2011.