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A Closer Look at the Stability of CapEx and Trends of Mobile Revenue in Sub-Saharan Africa

The Sub-Saharan Africa growth in mobile service revenue is projected to be roughly 4% in 2018. This comes after an increase in the growth rates witnessed in some markets in the last six months of 2017.

There are expectations that growth will gradually decline in the coming years. Growth in data traffic remains strong in many key markets, and it is vital for the growth of service revenue. But challenges based on smartphone affordability and the shortage of interest in data services in some markets segments might be a hindering factor for short-term growth. This could also pave way for operations in some key markets beginning to subscribe handsets in an urge to push for growth in the short term.

Revenues are expected to report a slight growth towards the end of 2025. This will highlight the impact of the current migration to 4G networks. It will also highlight the immediate impact of 5G network launching and the related new revenue streams. Margins of EBITDA have been stable in the recent past. This is despite the regulatory action, inflation and competitive challenge in some markets. Operators have applied strategies familiar from developing countries to manage the costs. Examples of such strategies are the digitization of important services and the use of machine learning. For instance, Vodacom has created platforms and services in South Africa.  It will, later on, roll it out to its other areas of operation in the region. These comprise the use of chatbots to reduce the pressure on call centers by improving customer services.

There is a reduction in the competition in some countries across Sub-Saharan Africa. The current ongoing consolidation has also played a part. For example, Airtel has made some consolidation steps in the recent years such as the payment agreement between them and Millicom to buy Tigo Rwanda. It then followed with an agreement in 2017 with Millicom to combine the operations of the two firms in Ghana. Sub-Saharan Africa mobile operators invested around $33 billion CapEx within the four years up to 2016. There was a growth in investment over the period to 2015 as operators invested in the building of networks with a reduction in 2016. This reflects the impact of foreign exchange. It is believed that the levels of CapEx will remain stable up to 2022 after which there might be a gradual increase. This is because operators are still going on with investing in mobile broadband capacity and the deployment of initial phases of 5G.

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Written by Denis Opudo

Am an engineer who's a tech blogger, hit me up on dennis@techinafrica.com and we base our discussion on technology in Africa and the rest of the world.
Denis the Tech guru

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