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Southern African Mobile Communications Market
Frost & Sullivan, Oct 2009, Pages: 210
Customer Retention Strategies, Coupled with an Effective Value Proposition, to Sustain Growth in the Southern African Mobile Communications Markets
The four Southern African countries, namely Botswana, Namibia, Zambia and Zimbabwe, have divergent mobile communication markets. On the one hand, Botswana and Namibia have high mobile penetration rates, with Botswana having more than 100 per cent. Small addressable markets in these two countries constrain long-term growth and the average revenue per user (ARPU) for voice is declining due to greater competition. Therefore, mobile operators are focused on retention strategies and extended data offerings to protect their market shares. On the other hand, Zambia and Zimbabwe, particularly the latter, have much lower mobile penetration rates with a high demand for voice services. Zimbabwe is a special case as it has recently emerged from a record-breaking hyperinflation. The resulting underinvestment has degraded its network infrastructure. As both these countries are relatively poor with large sections of the population being poverty stricken, offering a compelling value proposition is an important differentiating tool to ensure continued growth.
'All four southern African countries have experienced double-digit subscriber growth in the last five years that has created a powerful network effect which continues to drive market growth, albeit at lower levels,' says the analyst of this research. 'Value-added and data services are increasingly becoming revenue drivers, particularly in competitive markets such as Botswana and Namibia, which have high mobile penetration levels.' Consumers in these countries have looked to mobile communications as an alternative to fixed line networks, which have been not been extended appreciably over the last ten years. Additionally, consumers are likely to look to mobile operators for Internet connectivity. Third-generation (3G) networks are already well established in Namibia and Botswana paving the way for mobile operators to offer advanced data and value-added services. So far, only one operator in Zimbabwe has launched 3G, while in Zambia, 3G will be launched in 2010.
Network Infrastructure Supporting Broadband Speeds Vital for Maintaining Blended ARPU Levels
Since most of the new subscribers are increasingly poor, there is a decline in the average blended voice ARPU, which is exacerbated by challenging global macroeconomic conditions. At the same time, operating costs for mobile operators have soared, and profit margins have come under pressure. For instance, inadequate power grids require mobile operators to have backup generators, which are adversely affected by the rising fuel prices. 'Value propositions take on special importance in markets where poverty levels are high and ensure that subscriber growth rates and revenues are maintained in the face of increased competition,' explains the analyst. 'Additionally, up-to-date network technology and alternative power generation combined with infrastructure sharing allow for costs to be controlled.'
In more mature markets such as Botswana and Namibia, mobile operators have identified business as a lucrative sector and are using innovative telecommunication solutions to maintain blended ARPU levels. Network infrastructure that supports broadband speeds is a vital component of this strategy. 'While ARPU levels for pre-paid subscribers are relatively lower than that for post-paid customers, innovative retention strategies and increasing consumer participation in mobile communications with subsidised hand sets can ensure lower price elasticity even in a competitive market,' concludes the analyst. 'This will allow operators to migrate subscribers towards a higher value.'
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
By region:
- Botswana
- Namibia
- Zambia
- Zimbabwe
This Frost & Sullivan research service titled Southern African Mobile Communications Market provides an overview of the southern African mobile communications markets in Botswana, Namibia, Zambia and Zimbabwe from 2008 to 2015, with 2008 as the base year. This research service quantifies the current and future market sizes in terms of subscribers and revenues and analyses the current operating expenses (OPEX) and capital expenditure (CAPEX) trends in the markets. It evaluates the operators’ strategies for value-added services, pricing, marketing and their impact on operations, examines the regulatory environment and its impact on growth, and identifies and analyses the potential for alternative mobile technologies.
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