Friday, 7 September 2012

What's the real Mobile Penetration rate in Africa?

One of the conundrums in the African mobile market is differentiating between subscribers and subscriptions: or put another way, what is the true mobile penetration rate? Ericsson last month published its ‘M-Commerce in Sub-Saharan Africa’ report which provides an insight to the actual level of mobile penetration in the three countries studied.

Using the conventional mobile penetration metric – dividing the population by the number of mobile subscriptions - South Africa tops the table with 127 percent; Ghana is placed second with 86 percent, and Tanzania is in third place with 55 percent.

But using the Ericsson research to calculate the number of individual subscribers then reveals an alternative view of mobile penetration with South Africa still in pole position with a mobile penetration of 121 percent, Ghana drops to 61 percent and Tanzania to 35 percent.

In relative terms, South Africa’s penetration falls by some 5 percent, but for Ghana and Tanzania the fall is in the region of 30 and 36 percent respectively.

Mobile Penetration: Subscribers v Subscriptions Q1 2012 in South Africa, Tanzania and Ghana

This seems to correlate with Bharti Airtel’s assessment of the market after it acquired the Zain African assets. In September 2010 Bharti noted that the market faced a: "huge challenge with multi-SIM environment and hence the churn levels are high". Bharti said it believed that the real mobile penetration in Africa was around 20 percent rather than 30 percent often quoted; so on this basis subscriber numbers would be third less than the quoted subscription totals.

The caveat would be that this applies to developing markets, rather than markets that have matured with good levels of ‘population’ coverage, so lessening the need for multiple SIMs.
Ericsson has previously noted that there is a large difference between the number of subscriptions and subscribers. This is due to the fact that many subscribers have several subscriptions. Reasons for this could include users lowering their traffic cost by using optimised subscriptions for different types of calls, or having different subscriptions for mobile PCs/tablets and for mobile phones. 

To see how subscription-based mobile penetration has evolved in Africa, check out this mobile penetration video clip.