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The world might be in recession but the African telecommunications sector continues to boom, fuelled by privatizations, liberalization, new cell-phone services and infrastructure projects - some funded by the World Bank, African Development Bank and other agencies, but more funded by innovative entrepreneurs in partnership with international telecoms companies.

Although cable connections across many African countries are in a poor state of repair or non-existent, the continent is slowly being connected to the global community through five undersea cable projects, three of which are due for completion in 2009.

The African cell-phone sector is the fastest growing in the world, with subscription growth between 2007 and 2008 at 41% annually. Cell phones currently account for 90% of telephone subscribers in Africa. At the beginning of 2008, there were 300 million mobile subscribers on the continent.

Mobile subscribers in Africa are also now more evenly distributed. In 2000, South Africa accounted for more than half of all Africa’s mobile subscribers. By 2007, however, almost 85% were in other countries.

One of the reasons for the high growth rate of mobile subscribers is the lack of an affordable, efficient fixed line infrastructure. Wireless is thus the solution of choice and is making fixed line upgrade projects largely redundant. Mobile network operators have stepped in, providing not only voice communication but, with the launch of third generation (3G) services in a number of mobile phone markets, playing a considerable role in internet service provision.

While a number of satellite based services are already in operation above the continent, in September 2008 Google announced the successful launch of its new satellite, which can capture images from 423 miles above the Earth and travel at about 4.5 miles per second. Also in 2008, Google and a number of partners announced a Linux-based open development software platform for mobile phones which they expect will pry the telecom industry open and merge it with the Internet.

Broadband penetration has traditionally been low across the continent, with access being limited to urban areas. Access is, however, becoming more widely available, with the number of fixed broadband subscriptions passing the 2 million mark in early 2008.

On the regulatory front, governments still own monopoly fixed line operators in most countries. However, for the most part there is competition in the cell-phone sector, mostly with international network operators in partnership with local investors and entrepreneurs. International players with major investment on the African continent include MTN, Vodacom, Zain, Vodafone, Orascom, France Telecom, MIC, Etisalat and Portugal Telecom.

Revenues in African markets will decrease for telecom firms as average revenue per user (ARPU) levels are expected to drop by half by 2013. For Middle East mobile telecom firms such as Etisalat and Zain, Arpu has dramatically decreased due to increasing competition, price reductions and a second wave of customers are predominantly lower-income, Oliver Wyman said in its report.

In fact the most recent growth has come from emerging markets with high population and relatively low rates of penetration, such as sub-Saharan Africa and South Asia for these telecom firms, according to the international management consultant firm.

The ARPU will drop from US$12 today to US$6 in Sub-Saharan Africa by 2013 and that poses major challenges for operators.

The challenges for sub-Saharan Africa are considerable. In most sub-Saharan markets, per-minute prices are still high relative to the purchasing power of the population. A customer with a budget of $1-2 per month for telecom services will only be able to make 6-12 minutes of outbound calls per month,” Hildebrandt said.


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