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Connecting the Continents
by Paul Gibson

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Posted by Paul Gibson

The race to connect an entire continent has finally begun. The grandiose and extensive lands of Africa are now open-season for Vodacom. On November 13th, the gates of Africa were finally opened to create a vast mobile phone network that will stretch across the entire continent, well, almost - with the exception of Egypt and Kenya.

The African continent represents the fastest-growing mobile phone market in the world. Some 50,000 new users are registered every single day in Africa. Though it may be hard to pinpoint the exact number of mobile phone users, at present, there are anywhere from 80 to 100 million mobile phones. That same number was just 8 million at the turn of the century, in the year 2000¹.

Though Telkom remains the market leader in Africa, Vodacom is sure to pick up a great deal of market share and consequently, “an important piece of the pie�?. The company itself has reported increased net profits of 3.1bn rand (which is approximately $426 million or £224 million), representing a 30% jump since the same time last year.

The number of subscribers to Vodacom services has risen sharply to 25.9 million. The significance of this decision to open the rest of Africa to Vodacom services becomes that much more evident if we consider that Vodacom has only been functioning in five of the more than 50 African countries. Up till now, they have literally consolidated their business in a tenth of the African market. That leaves 90% of Africa open to receive or subscribe to Vodacom services. The possibilities are truly remarkable.

Nevertheless the battle for telecom domination seems to have a clear winner at this time – Telkom. Telkom takes in approximately 25bn rand annually ($3.5 billion).

The prospects for a bright future may look optimistic right now, but the lack of infrastructure together with political instability will surely play an important role in the development of this emerging phone market. As communication networks and infrastructures expand, the virtual gap between fully-developed modern economies and the Third World is quickly closing and not only European telecoms are getting in on the action.

As we mentioned a couple of weeks ago, the Red Star has also signed on to increase trade and commerce in the region. And this week at the China-Africa Summit held in Beijing, the Chinese have pledged $5bn in loans to Africa over the next three years². Who knows, we may be dancing the Nigerian Jota pretty soon!

¹ BBC News Online, 13 November 2006: Vodacom gets African growth boost

² BBC News Online, 4 November 2006: China to double its aid to Africa

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This letter is stored with the following tags: africa mobile_phones telecom

12 comments for Connecting the Continents

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Re: Connecting the Continents by Domnall

I can’t help but think that the African market would have been more lucrative, if we hadn’t stolen all those diamonds and all that gold from them.
This is an interesting article as it does raise the question of whether Africa will be ‘western’ or not. My South African cousin is western in ideas but she is only one.
In the West policies are always short term (because politicians have to face an election every four or five years) so I think it will be difficult for countries like the USA to have any long term strategy. Perhaps the UK, through the British Commonwealth, will have more success. But it may be the Chinese, with no domestic electorate to woo, who become Africa’s greatest friend.
Mobile Technology may be more attractive to African states as there is no need to lay down land lines. It is easier to establish a mobile network, I imagine. And mobile voice telephony is merging with other services such a radio,images and computers. So the potential for doing good for Africa’s poor is enormous.
It will be interesting too see the impact of new First and Second World policies and technologies in Africa.

Re: Connecting the Continents by Paul

Thanks for your comments Donal.I couldn’t agree with you more! You bring up a very interesting point about how “temporary” the terms for our leaders are. You hit the nail on the head when you mentioned the Chinese-African connection.
I will second your thoughts about “all those diamonds and gold.” Now, if we can only stop (in the present) stealing diamonds from them and stop financing revolutions – now that would be a real step in the right direction!
Has anyone heard about a company called Executive Outcomes? Scary stuff.

Re: Connecting the Continents by Cristina

Hello Paul,
Just yesterday there was a special report on African infrastructure in the Finantial Times.
They said that fixed telephone lines have not been able to take off in Africa, and now, with mobile phones, there’s a great opportunity for Africa to come into the 21st century.
It seems like the main problem is the lack of infrastructures, but it requires a huge amount of money. From what I read even though mobile phone penetration is really low (15% globally), there are at least two mobile operators in most African countries, so competition might lower the prices.
I think that the money and infrastructure investments might come from Vodafone, Orange, Orascome and other operators. I think that corporations are starting to have more power than countries, because their tentacles are reaching governments.
And yes, China and let’s not forget about India, might be the major African partners in this journey.
Regards,
Cristina

Re: Connecting the Continents by Paul

So I see the FInancial Times is now taking after the Business Weekly!
Yes, Africa is an emerging market in every sense of the word. I did forget about India. India and their newborn bouncing baby “BOLLYWOOD” are really taking off, though I have no idea about what India-Africa relations are like or if they even exist.
While communication is an essential part of the “infrastructure equation,” something tells me that it’s going to take a lot more than mobile communications to sort out the language problem. Do you know Swahili or Arabic?

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