Sub-Saharan Africa operators call for government alliance

Sub-Saharan Africa operators call for government alliance

Africa is reaching a tipping point as take up of connectivity services has surged year-on-year and it is not slowing down anytime soon. Its population is huge at 1.1 billion and young, a perfect combination for a surge in data usage and opportunities for operators. But now is the time for closer collaboration among rivals and governments - and the continent’s six largest operator groups are looking to lead by example.

Spearheaded by the GSMA, Africa’s so-called ‘Big 6’ - Airtel Africa, Axian Telecom, Ethio Telecom, MTN, Orange and Vodacom signed an agreement last year aimed at aligning their strategies to work more closely with governments to create the right market structures in several key areas, including taxation, regulatory support, climate policies and energy.

Mobile operators in Sub-Saharan Africa invest around US$6-8 billion per year in capital expenditure, equating to around 20% of revenues, according to data from the GSMA. However, they argue this is not enough to meet their ambitious target of connecting all 1.1 billion people in Africa and digitally transforming the continent. 

Between 2013 and 2023, operators invested over US$70 billion in building mobile infrastructure to connect 85% of Africans to mobile broadband connectivity; for comparison, the global average is 95%. However, over 680 million people do not subscribe to mobile broadband services despite having coverage. The World Bank has estimated that another US$100 billion is needed to provide universal connectivity in Africa.

GSMA head of Sub-Saharan Africa Angela Wamola predicted there will be fourfold growth in data usage on the African continent, as internet access becomes ever more central to the functioning of economies. This will only accelerate when AI enters the periphery of African markets, noted Wamola.

“We’re also looking at AI models and how that will increase the amount of data that we will need in Africa. This will have a corresponding impact on the energy the continent needs to prepare for it. 

“This is also during the midst of our challenges of extending not only the generation of energy but the distributing connectivity to remote in villages so they are able to benefit from meaningful connectivity,” said Wamola.

Plugging the coverage gap in rural areas is difficult as operators must see a return on investment,  noted Airtel Africa Chief Regulatory Officer Daddy Bujitu Mukadi, who urged closer government collaboration to come up with solutions to plug these gaps.

“One of the biggest areas of challenge I would say is coverage in rural areas, because the biggest problem is you will have no business case in these areas.

“We operate in countries where you have large land masses and cities that are spread far in-between. Most of the time top cities are the most viable locations for investment while in the rest of these countries there is an affordability of devices and data issue. Its basically about finding the right model that will allow us to drive digital information inclusion that doesn’t benefit only one part of a country but all of it”, said Mukadi. 

Even when there is coverage, operators run into the aforementioned affordability issue with devices and data. The Big 6 are calling for a new taxation model for the telecoms sector to enable them to pass on savings to consumers. 

Getting the right support financially from governments through tax breaks would enable operators to invest more into base stations and spread their coverage. 

But this also brings up the major challenge of energy, which has long plagued the African continent. This must be tackled in tandem, argued MTN Group Chief Sustainability and Corporate Affairs Officer, Nompilo Morafo.

“We have noticed that some areas that we want to connect, don’t have the available energy. We’re uniting to see what can we do together to actually make sure that this problem is not as significant as we see it across the continent. 

When we go through these problems individually it does not benefit consumers or the state. Coming together to develop initiatives to improve our operations, is not motivated simply from a cost perspective, but also from the perspective of how do we bring in governments with us on this journey.

“Right now we found that individual efforts of operators don't scale as quickly as they should, because we're not sharing the lessons that come from what we've experienced in South Africa or Nigeria,” said Morafo. 

Axian Telecom CEO Hassanein Hiridjee estimated operators will need up to 10 times more energy than they consume today to meet the growing demand for mobile connectivity. 

“We have to find a solution, and governments are ready to take on board what kind of reforms, policies, taxation, support are needed in closing this investment gap, because there will be huge demand and we need to provide access to all of the population,” said Hiridjee. 

He added governments across Africa are starting to recognise the value of mobile connectivity after launching national digital ID cards and using mobile money platforms to give out financial support during the COVID crisis. 

With Sub-Saharan Africa’s ‘Magnificent 6’ ready to join hands and take on these key challenges together, it can only benefit the over one billion people in Africa who should not be left behind in the expansion of this exciting technological age. 

Governments must work closely with operators to elevate not only their economies but also their people, who deserve the quality and widespread connectivity, that we in the west take for granted. 

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