Despite significant regulatory and economic challenges in Africa, several carriers are pushing ahead with LTE deployments and finding ways to reach customers eager for the high-speed mobile technology.
In Africa, only 26 operators have commercially launched LTE in just 12 of Africa’s 54 countries. The vast majority of connections remain 2G and 3G, with LTE representing less than 1% of mobile connections in the region.
The main barriers are spectrum availability and the high cost of devices relative to the low incomes in Africa, according to Mpho Moyo, an analyst with Analsys Mason.
“LTE is a niche service mainly being deployed in big cities,” said Moyo. However, she did point to a few carriers making inroads with data-only services targeted toward businesses.
LTE Pioneers
Rather than holding back, several African telecommunication providers have taken innovative approaches to LTE, working around — or even using — the continent’s challenges to reach customers. For instance, in a region where fixed lines are rare, Neotel, South Africa’s main fixed line provider, has started offering businesses an LTE service as an alternative to a fixed line.
Smile Communications claimed to be the first on the continent to launch LTE broadband Internet when it began the service in Tanzania in 2012. Since then, Smile has expanded its LTE service to Uganda and Nigeria and plans another launch in the Democratic Republic of Congo later this year. Smile’s LTE offering currently is data only and targets small and medium-sized businesses, hot spot providers and households.
The company says customers have a high level of satisfaction with the service. In fact, the quality of LTE surprised users so much that on the Nigerian launch in March, COO Tom Allen cautioned people to carefully monitor their data usage.
“The experience is so much faster and better than anything our customers are used to that some customers initially use a lot more data than they expect,” said Allen. “It’s the kind of problem we enjoy dealing with, and our customers fall in love with the experience immediately.”
Another pioneer, Surfline, launched LTE services in Ghana this year with the single largest deployment of LTE cell sites in Africa according to the company. Like Smile, Surfline is focused on data and seeks to capture customers frustrated with slow and unreliable service. The company, which invested more than $100 million on the rollout, is gambling that it can attract new customers as currently only 20% of Ghanians use the Internet.
Mobile growth
Overall mobile usage — and revenue — is increasing in Africa. In fact, Analsys Mason predicts that Sub-Saharan Africa will be one of the greatest growth success stories of the next five years. According to the consultant firm, telecom service revenue in the region will increase from $49 billion in 2013 to more than $65 billion in 2018, a 6% compound annual growth rate — fueled mostly by mobile, which is expected to post a 6.7% CAGR.
South Africa is the biggest and fastest growing market in the region with $14.94 billion in revenue in 2013. And the country is experiencing a data boom, which is taxing existing networks. One of the country’s biggest mobile operators, Vodacom, is turning to LTE simply to offload its full 3G network.
According to spokesperson Richard Boorman, Vodacom is making a big push to expand LTE, investing 14 billion rand ($1.3 billion) during the past two years and another 9 billion rand ($840 million) planned this year. Also, Vodacom isn’t charging a premium for LTE — unlike its parent company Vodafone in the United Kingdom ― which helps with adoption.
“In South Africa, as in many emerging markets by and large, we are skipping the fixed line stage,” said Boorman. He noted that there were about 1 million fixed lines in the country while there were 30 million mobile data users. And in that context, LTE becomes very attractive. “It’s not an add-on to your fixed connection, it is your only connection,” Boorman said.
Future challenges
South African operators may be ready for LTE, but they are hindered by the same problems as carriers in other African countries: the high cost of devices and lack of spectrum.
LTE-enabled devices often cost upwards of $500, a price point that’s out of reach for most Africans. Many observers believe that LTE can’t take off on the continent until the device prices fall below $100. Those smartphones may be on the way. Google recently announced a $100 smartphone, and Mozilla launched a Firefox OS smartphone for $33 in India — both have yet to arrive in Africa.
In addition, most African countries have not yet completed the digital television switchover, which would move analog television off the 700 MHz and 800 MHz spectrum bands that can then be used for LTE deployments. The switchover and resulting spectrum auctions aren’t expected until at least 2015.
This is true in South Africa as well, where a spectrum auction is planned for June 2015. Speaking at a financial results presentation earlier this year, Vodacom CEO Shameel Joosub said mobile providers were “choking” from lack of spectrum.
These factors, as well as a continuing buildout of 3G, will continue to hinder LTE investment and adoption in Africa.
Joss Gillet, senior manager at GSMA, predicts that LTE will rise to only 3% of all connections in Africa by 2020, but that’s just looking at the 26 carriers that have launched the technology so far. Gillet said he couldn’t account for new players coming into the market when more spectrum is made available.
“There will be 46 auctions across Africa,” he said. “It’s almost impossible to speculate.”
One thing is for certain, Africans are interested in LTE — if they can afford it.
“We are going to see massive growth, if smartphone prices come down and we can get to a bigger portion of the population,” Boorman said. “There’s a great hunger down here to get connected.”
For more about LTE in EMEA, read this article on the progress of LTE in Europe.
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