HomeOpinion & AnalysisColumnistsThe mobile phone network landscape

The mobile phone network landscape


As we look back at the last 26 years of a journey that began in what was euphemistically described as Mobutu’s country, we must all be satisfied that changes that have taken place in the mobile phone operator industry have been principally market-led and driven with no foreign donors being involved either as facilitators or actors.Report by Mutumwa Mawere
The character of the industry and its actors has evolved over the years underpinned by market forces and voluntary participation by even the poorest of the poor.

When the journey started, no one had an idea that Africans would respond in the millions to the platform whose primary mission was to connect people either by voice or data.

Indeed, Africans have demonstrated that when it comes to voice and data connection, they want to be in the value chain on commercial basis.

The fundamentals of the industry defy the logic that says Africa is a basket case that needs the intervention of charitable institutions or even the genius of State actors.

The colonialists who came from distant shores into Africa, have not been disappointed by the continent’s ability to reward effort with handsome financial returns.

Diamonds and gold were catalysts in laying the foundation of corporate South Africa.

These precious minerals created by God attracted free thinking men and women to move from their countries of birth and create a new civilisation in the continent inspired by a simple belief that better and prosperous days were possible and cheaper to realise in Africa than in Europe.

People who became part of the adventure were not forced into ships, but understood that there was nothing inevitable in life and had they remained in Europe, they probably would not have had fulfilling lives.

The Chinese did not need to be invited into Africa, but driven by the same ethic have and are showing that Africa’s promise will only be revealed to the daring and adventurous.

The number of mobile subscribers in 1986 was about 200 in the former Republic of Zaire (now Democratic Republic of Congo) and today the subscribers have crossed the 700 million mark.

By the end of this year, it is expected that Africa will have more than 735 million subscribers.

Indeed, Africa is the fastest-growing mobile market in the world and is the biggest after Asia.

Who would have imagined that this would take place in one generation?
We all expect to be led by State actors, but the cellular industry has evolved and grown without a visible leader and yet the lessons therein are less understood by the people who lead Africa without vision, but more importantly who undermine the poor by thinking for them.

With a population of a billion people, it means that the mobile phone lines that are in existence account for about 70% of the African people or equivalent to a 70% penetration rate.  That is democracy at work.

Political actors in post-colonial Africa cannot boast of the same achievement in opening the space for participation across racial, tribal and class lines.

New citizens have been created by handsets that daily act as bridges for human beings wishing to connect voices.

It does not take a rocket scientist to know that the bad and expensive landline connections in Zaire caused a new revolution without guns to unfold in the continent.

If ever anyone wanted a case study to demonstrate the futility of the argument that the State can be relied upon to deliver the promise of a better and efficient telecommunications system, one does not need to look further than the history of mobile telephony in Africa.

Nigeria has more than 100 million subscribers making it the largest market in Africa and not the oldest, followed closely by Egypt with about 92 million subscribers.

The continent has more than 198 individual GSM licences and about 19 CDMA licences.

Only Ethiopia and Eriteria have no democracy in the industry with single networks all controlled by the government.

Among Africa’s top ten mobile phone operators, indigenous African operators, control only three and they account for about 21% of subscribers.

France Telecom’s Orange and India’s BhartiAirtel are each represented in 17 African states followed by the MTN group in 16 African states.  The United Arab Emirates controlled Etisalat is represented in 10 African states.

South Africa’s pioneer Vodacom is now controlled by Vodafone that is directly and indirectly represented in eight African states.

Zain of Kuwait is also represented in three African states after passing the torch to Airtel in 2010, as well as the Luxembourg-registered Millicomthat is in seven African states.

The control of the industry is in foreign hands, but users are predominantly Africans.

The faces of the men and women who control this industry are less known and yet the cash generated in the business model would suggest that more needs to be done to profile and document the people who drive the engine.

A business model that is foreign-controlled now services a little more than 50% of Africa’s 700 million subscribers.

The industry is highly regulated and the faces of the regulators are indigenous Africans and to a large extent, the character of the industry is not a reflection of what the majority of Africans want to see, but what the market has produced.

The market has attracted non-Africans driven by a motive to make money to be part of the African narrative and journey.

Zain bought Celtelin 2005 and on June 8 2010, the group disposed its entire shareholding in Zain Africa BV, a company registered in the Netherlands to Airtel for an enterprise valuation of $10,7 billion.
The infrastructure that has been invested in the industry has been largely financed by private funds.

The domination of the African market by emerging nations is not accidental, but reflects the pessimism that is often associated with investing in Africa in the developed world.

The US with half the size of Africa is missing in Africa’s narrative and equally UK’s Vodafone had to acquire the controlling stake in South Africa’s Vodacom after realising that the African business will continue to move forward without them.

Economic nationalism has not been pronounced in the sector as it has been in the mining and agricultural industries.

Actors who have come into the industry have not been invited, but have sought opportunities in the belief that the market will support investments and so far the record of Africa has shown that real business models can be constructed and underpinned by sound fundamentals.

However, what is not clear is whether African state actors will not be tempted to see in the industry a possibility of extracting economic rents and in so doing undermine the industry.

The industry without the support of state actors who in the final analysis are responsible for allocating frequency spectrums, will not be what it is today.

The industry’s actors are remote from the challenges that their subscribers face in their daily lives.  They have tended to approach business using a silo mentality.

Even the money that has been made by the industry on the back of poor retail African participants has not been deployed to address the key and fundamental challenges that confront the continent.

The example of Mo Ibrahim and his shareholders who made a bundle of cash from the disposal of Celtel and subsequently the $10,7 billion Airtel deal, went a long way towards demonstrating that the poor who use the networks to communicate are responsible for the big ticket transactions and yet the funds made easily find themselves outside the four corners of Africa.

The disconnect between the industry and state actors poses its own unique risks and yet provides an opportunity for the industry to play its part in shaping and defining the corporate landscape and character of Africa.

If nothing else works in Africa, the history of the mobile telephone industry in Africa has given enterprising people a reason to believe once again in Africa’s potential.

The colonialists were rewarded with more than money for they became African, as well fully knowing that it would be difficult for native Africans to be Chinese let alone fully integrated Europeans, for example.

Our work will only begin when we think critically and constructively about the role of firms and their actors in building a prosperous, inclusive and cohesive borderless Africa.

The industry players have quietly connected Africa and have been more active in creating an Africa that is shared and linked.

Mutumwa Mawere is a  businessman based in South Africa. He writes in his personal capacity.

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