Impact of online communication services on the telecommunications market in Africa

This report considers the impact of online communications services upon traditional telecom markets in Africa, especially in Kenya, Senegal and South Africa.

The report shows that online communication services are accelerating demand for mobile broadband, helping to stimulate the growth of traditional telecommunication markets. Their adverse effects upon traditional markets are limited and are generally overall positive in the selected African countries, opening up opportunities for telecom players and new economic opportunities even beyond telecom markets.

Key findings:

• Online communication services are accelerating demand for mobile broadband, acting also as a stimulus for smartphone demand, and helping to stimulate the economic growth of traditional telecommunication markets (with numerous zero rating deals and partnerships between telecom operators and online communication service providers) and the overall economy in general. Countries that have been more open to online communications services have seen a faster adoption of mobile broadband, smartphones and consequently of their economic growth through mobile applications and services.
• The volume of domestic voice calls continues to rise and revenues are relatively unaffected by the introduction of online communication services. The effects of competition between domestic telecom operators and new regulations (such as regulation of mobile termination rates) have created generally a bigger impact than the introduction of online communication services. The only exception is international communications, where users are increasingly choosing the low prices and the enhanced features of online communication services
• In countries where SMS pricing is low (e.g. Kenya), the volume of SMS traffic continues to rise, but in countries where SMS pricing is higher (e.g. South Africa), users are migrating towards online communication services. The net effect of the introduction of these online communication services on telecommunication services markets is positive in all African markets studied: in other words, there appears to be no loss of revenues for telecom operators. This is because adverse impacts on SMS and voice call revenues are outweighed by increased revenues from retailing mobile broadband (despite sometimes aggressive competition from telecom challengers).