At the latest GSMA: Mobile 360 Series – Africa conference, it was revealed that the growth of 3G connections in Sub-Saharan Africa largely reflects the rising smartphone adoption rate, which has doubled in the last two years to 20 percent of total connections.
According to the GSMA, in comparison, the global average is just over 40 percent. The adoption rate, which is set to accelerate further to one-third of connections by 2017 and more than half by the end of the decade, is benefitting from the increasing availability of low-cost devices.
The average selling price (ASP) of smartphones has fallen significantly in most markets across the region, with more devices now available in the sub-$100 price range. In March 2015, Orange announced plans to launch a sub-$40 smartphone running on the Firefox OS in Africa. The low-cost device market is dominated by Asian vendors, such as Gionee, Huawei and ZTE. However, other global vendors are also expanding in the region with similar pricing strategies. In August 2015, Google extended its Android One program to Sub-Saharan Africa with the launch of the Hot 2 smartphone. The device will initially be sold for $90, but Google is aiming to bring the cost of the handset down to the $50 mark within the next three years.
The GSMA further revealed that despite the shift in the region towards smartphones and mobile broadband, nearly 450 million connections will still be based on feature phones by 2020. Affordability remains a key limiting factor for many consumers in the region, especially poorer rural dwellers who still struggle to afford data-enabled devices and tariffs, despite falling prices.
Fewer than four in 10 people in the EAC block owned a mobile phone at the end of 2014. The main barriers to further subscriber growth relate to access and affordability, especially for consumers in rural areas where around two-thirds of the population live. Kenya has the highest penetration rate of 42%, while Burundi has the lowest at 17 percent. The penetration rate is expected to rise over the next five years, but will continue to lag the regional average.
The EAC is seeing a rapid transition to mobile broadband, with the proportion of 2G connections expected to decrease from just over eight out of 10 connections at the end of 2014 to less than half of total connections by 2020. The rollout of 3G and 4G networks has played a major role in this transition; 3G services are available in all five countries in the sub-region, and commercial 4G services have been launched in four countries.
According to the GSMA, by 2020, the sub-region is forecast to have nearly 17 million 4G connections, equivalent to 10 percent of the total connections base. The recent launch of a 4G network in Kenya and the ambitious expansion plans of the government-backed single wholesale network (SWN) in Rwanda will be the main growth drivers in the coming years. Smartphone adoption in the sub-region is benefiting from the expansion of mobile broadband networks, as well as the fall in device costs. The smartphone adoption rate is set to accelerate from around 11 percent of connections in 2014 to more than 50 percent by 2020.