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September 09, 2014

Mobile Communications Markets of the DRC and Ethiopia Will Be Driven By Data and Mobile Money

Despite the fact that they have large populations, Ethiopia and the Democratic Republic of the Congo (DRC) have what can be considered, in terms of connectivity, some of the least developed telecom markets in Africa. This is mainly due to the fact that they have limited transport, telecom infrastructures along with their socio-economic conditions. Both markets are beginning to show high growth, which is due to rising operator investments in infrastructure and more over  growing government support to boost their economies.

There is a new report out today from Frost & Sullivan entitled, “Africa Mobile Communications Outlook on the Democratic Republic of the Congo and Ethiopia” which is part of the broader Mobile & Wireless Communications report. The study shows that the two markets mentioned above earned revenue of about $1.78 billion last year, with an expectation that it could reach as high as $3.27 billion in the next four years.

Some of the factors that have contributed to a snail’s crawl development of the mobile communications markets include high poverty levels combined with very low disposable income. However, possibly a much greater influence is the lack of competition. As we know, competition makes markets grow as we have the ability to see not only new products, but also new services. Unfortunately, due to tight regulatory protection, state-owned Ethio Telecoms is still the only provider in the market.

One problem that the economy in this Sub-Saharan African region has led to is a very slow roll-out of more advanced networks such as LTE. The main focus and rightfully so, has been on subscriber acquisition and the expansion of networks designed for voice services. In many areas, this is the only form of communication. There is a plan in place referred to as the country’s Growth and Transformation Plan which should eventually open the market to competitors, which might then lead to further developments.

Lehlohonolo Mokenela, who is the information and communication technologies research analyst at Frost & Sullivan, made the following comments, "While voice is still by far the dominant contributor to service revenue, data services and mobile money solutions are expected to fuel growth in the long term. Data revenue will be driven by the increasing number of low-cost mobile devices in the market and the growing popularity of social media platforms. On the other hand, mobile money will grow in prominence as the number of Ethiopia and DRC's unbanked populations have prompted their respective governments to place financial inclusion at the forefront of their socio-economic plans. Mobile operators will need to consider more cost-effective network expansion strategies in the DRC in order to grow their customer base, especially in the rural areas. Leveraging infrastructure-sharing models and using hybrid base stations can help operators lower their operational site costs and mitigate the country's intermittent electricity supply."

Considering that the penetration rate for DRC was 36.4 percent and 24.1 percent in Ethiopia as compared to the rest of Sub-Saharan Africa, which is 61 percent, you can see that there is a lot of work involved if both markets expect to expand. The hope is that by opening competition and continuing with the growing infrastructure investments that data services and mobile money solutions will also continue to grow.




Edited by Stefania Viscusi



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