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Africa represents real mobile innovation

September 21, 2011 • Mobile and Telecoms, Top Stories

The TM Forum Management World Africa, a global communications industry initiative that assists members understand the complexity of running a service provider business, commenced today at the Hilton Hotel, in Johannesburg, South Africa.

Nik Willetts, TM Forum Senior VP for Communications (image source: TM Forum)

Speaking at the two day conference, Nik Willetts, TM Forum Senior VP for Communications highlighted the challenges of service provider transformation in Africa.

Willetts says business and IT transformation are a crucial prerequisite for agility, growth and profitability.

During a Q&A session with ITNewsAfrica, Willetts provided vital information regarding the state of Africa’s mobile industry and possible future opportunities.

Why is the African mobile market regarded as ‘the most exciting market in the world’?

Africa has the opportunity to capture markets that the more developed markets have already established. The opportunity to take a good share of the banking space, for example where many of the consumers that are being added now don’t have a bank account or experience in banking services – can have access to those services.

In Africa where some of those services are scarce for many consumers means you can take them on a journey from a pre-financial world and a pre-banking world to one where they can embrace it.

Is mobile saturation occurring in Africa?

“It’s inevitable that it will happen” says Willetts.

Africa experienced a mobile saturation of about 10% ten years ago to the current 60%. The African mobile market is experiencing growth of about 20% per annum. In about 5 to 8 years it would reach nearly100% mobile saturation.

“This is something nobody could have predicted.”

Willets says the operators and service providers that will succeed are the ones that have put in place the kind of infrastructure standards based approach that can support whatever they need to do, by putting together the customer experience management programme.

Operators and service providers need to go beyond just grabbing new customers that have never owned a mobile phone to taking business away from their competitors. Those will all come down to the product offering, the innovation behind that, catering and understanding the customer. To do all of that you need an agile business operation behind it in the IT and in the operations of the business.

Do you believe that Africa lacks sufficient mobile innovation?

Africa is rapidly becoming the envy of the world for its ability to innovate. Mobile payment is the most visible example of that today with mobile money products such as Kenya’s M-Pesa, which is rolling out in other countries like Afghanistan and potentially into India.

The opportunity for Africa is actually looking at other parts of the world that are struggling as a result of established alternatives to capture market share and leaping on that.

How can mobile operators capture market share in Africa?

The analysts 10 years ago didn’t predict the high mobile growth in Africa. A lot of home grown companies like MTN have succeeded in capturing the market share as they understand the continent, it’s a different market from every operational business cultural level.

Companies such as Etisalat and Vodafone are starting to enter the African continent as they can see the vast potential as well.

Nigeria where you have about 10 different mobile operators, is not a sustainable in a market, where the GDP is so low.

Africa will probably experience a lot of consolidation of service providers. Companies like MTN have a good opportunity to retain that market share if they have the right strategy. The important thing for those native operators to understand is that companies from outside Africa are having the same experiences already.

They are already developing strategies in markets that are saturated to address those challenges.

What is your future prediction of Africa’s mobile market?

That’s a really tough question. I think Africa is heading towards a different approach from the impact of mobile telephony from elsewhere in the world.

Mobile telephony has enabled people to work remotely, has enabled smoother communication and underpins a certain amount of commerce.

The underpinning and cultural effect of telephony in Africa is so vast where you go from communities that have no connectivity of any kind and in some cases no real information flow and fast forward them through generations to a point where they can obtain news, interact and do business over the mobile device.

The future is very bright but it’s very hard to put a number to what the market cap would be. These services are going to enable Africa to grow its GDP more aggressively.

What is driving Africa’s mobile communications trends?

The key driver for mobile communication trends is growth in the market, the fact that Africa is in a pre-100% saturation market means that there’s a lot of opportunities for adding subscribers on.

The driver that is attracting a lot of the external investment is definitely the opportunities beyond that, including mobile banking.

How can service providers seize the vast African mobile opportunities?

It all comes down to innovation. It comes down to individuals within those companies having the right culture, focusing on the customer experience, understanding the customer and at the backend of the business, having the flexibility and agility in the business to really capture those opportunities.

What are the major challenges for Africa’s service providers?

I think the big challenges in this market is the very low revenue per customer, huge levels of churn and the fact that such a large proportion, about 95% of the population is on prepaid tariff plan. In a prepaid market, there’s no security for service providers. Customer experience becomes absolutely key and really watching what the competition is doing is absolutely critical.

Bontle Moeng

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