Telecoms boom leaves rural Africa behind

While mobile phone usage has exploded across Africa over the last decade, transforming daily life and commerce for millions, it is a revolution that has left behind perhaps two thirds of its people.Poor or no reception outside the towns helps explain why the continent’s mobile penetration, in terms of the percentage of the population using the service, is far lower than previously thought, and the cost of providing that service to impoverished, sparsely populated areas remains prohibitive.In South Sudan, the world’s newest state, mobile reception is a nightmare. Less than a year old, the country already has five mobile operators. Its capital, Juba, is teeming with giant billboards, advertising mobile phones, but go just a few kilometres beyond a handful of fast-growing towns, and cell phones become useless.Multiple SIM cards help users navigate patchy network coverage and take advantage of price promotions from rival operators.That is typical of much of the continent.With a population of just over a billion people, Africa has over 700 million SIM cards, but with most users owning at least two cards, penetration is only about 33 per cent, according to a study released in November by industry research firm, Wireless Intelligence.“If we look at the fact that the rural population of Africa is about 60-70 per cent of the population, and if we look at the degree of penetration into the rural market, it’s very, very low,” said Spiwe Chireka of advisory firm IDC.In Nigeria, Africa’s most populous country, there are more than enough SIM cards for everyone, but penetration is only 61 per cent, according to a 2012 study by research firm Informa.The average mobile phone user in Nigeria owns an average of 2.39 SIM cards. Globally, only Indonesia is higher, with an average of 2.62 SIM cards per user.Even in Africa’s biggest economy, South Africa, SIM numbers comfortably exceed the population, but given the number of people using multiple devices, actual population penetration is closer to 80 per cent, says market leader Vodacom.“You’ve got a lot of people buying SIMs, but maybe not enough phones to put it in,” said Olayemi Jinadu, an executive with the Sierra Leone arm of Indian telecom Bharti Airtel.The unserved rural millions could represent another growth opportunity for Africa-focused telecoms like South Africa’s MTN, Bharti Airtel and Kuwait’s Zain, but first they have to figure out a cost-effective way to push into sub-Saharan Africa’s remote corners.“There’s great potential, but the big concern for us is operational costs,” said Andre Claasson, the chief operating officer at Zain South Sudan.In rural Africa, the cost of running a network tower often exceeds the revenue it reaps. Fuel is typically about 40 per cent of a tower’s operating cost, and in remote areas companies burn more diesel by bringing fuel to towers than is used powering them.Although roughly 73 per cent of Africa’s land has cell phone coverage, according to market research firm, IDC, that still leaves vast tracts of rural Africa without network access.Africa has 170,000 mobile towers now and needs another 60,000, according to tower company IHS Group, which at an average $200,000 each means an outlay of $12b.

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Telecoms boom leaves rural Africa behind