BMI View: Our Q315 East Africa report analyses latest industry, regulatory and macroeconomic developments in the telecoms markets of Burundi, Ethiopia, Malawi, Rwanda, South Sudan and Sudan. The six markets present challenging business environments, including the low spending power of the majority of consumers, high cost of network deployment in rural areas and political instability in some countries. The lack of competition and in some cases unfavourable fiscal regimes will also pose a downside to market growth; as a result penetration and the share of 3G/4G of the mobile market will remain among the lowest in the world.
Average mobile market growth in the six countries in FY14 was 9.3%. Malawi recorded the highest growth rate, estimated at 16.8%, while Sudan recorded the largest contraction of 5.6%.
Average mobile penetration among the six countries was 41.8% at the end of December 2014. Sudan had the highest penetration rate at 71.5% and Ethiopia the lowest at 24%.
Average monthly ARPU remained below USD3 in 2014. Only South Sudan recorded ARPU of more than USD5, while Burundi, Malawi and Rwanda reported sub-USD3.5 ARPUs.
Most of the countries in our East Africa report are underperformers on the regional scale in our Sub-Saharan Africa Risk/Reward Index (RRI) table. This is due to a combination of a number of industry specific and macroeconomic factors. The industry specific factors include continued monopoly in the Ethiopian telecoms sector, relatively low ARPUs because of price competition and low income levels, and political and economic uncertainty in some of the markets.
Key Trends And Developments
Burundi-based mobile operator Africa Cellulaire, which offers services under its TEMPO brand, has reportedly closed due to non-payment of a debt worth BIF10bn (USD6.49mn). The commissioner of internal taxes and non-tax revenues, a unit of the Burundi Revenue Department, has stated that TEMPO has not renewed its telecoms licence. The operator has also not paid its outstanding tax amount to the Agency for Regulation and Control of Telecommunications. This will reduce the competition on the Burundi mobile market.
The government of Malawi will impose a 10% excise duty on mobile phone text messaging and data transfers from FY15/16, beginning July 1 2015, according to Finance, Economic Planning and Development Minister Goodall Gondwe. The minister noted that the government had removed custom duties on mobile phones to boost mobile telecoms services in the country. Custom duty on solar cellular telephone chargers was also removed after the expansion of telecoms services in Malawi.
Malawian mobile licensee Celcom has until July 28 2015 to launch services, failing which it will lose its operating licence, according to the country's telecoms regulator. The operator was awarded a technology neutral licence in May 2011 with requirements to launch services within 18 months. The operator delayed its roll out to April 2013 after it complained of foreign exchange shortages. The operator asked for a three year extension, despite improvements to access to foreign exchange. It is increasingly unlikely that Celcom will launch services in Malawi. BMI can find no indication of contracts awarded to network equipment vendors.
The South Sudanese government has joined an initiative that enables the country's mobile users to make calls to Kenya, Uganda and Rwanda at local charges. The regional network was launched in the week ended February 28 2015. The 'one network' scheme will cut the cost of making telephone calls considerably and boost trade and investment within East Africa, according to the country's Minister of Telecommunication and Postal Services.
Tigo Rwanda launched its 4G internet service in the country in January 2015, two months later than its rivals MTN and Airtel. The service is currently available to households in Kigali and will be expanded to other cities and towns in the coming months. The operator has also signed an exclusive partnership with an African movies distributor iROKOtv to offer a subscription-based digital entertainment service for its 4G subscribers. Subscribers can access more than 4,000 movies and television series using the distributor's video-on-demand platform, irokotv.com. Subscribers will have to pay extra 4G data charges while watching movies.