Telecom firms to post 300pc revenue growth

By Macharia Kamau

Revenues generated by mobile phone services providers in the region are set to grow by more than 300 per cent to Sh675 billion (US$8.99 million) in the next five years from Sh197 billion (US$2.96 million) generated in 2008.

A new study by research firm Frost and Sullivan attributed the growth to a decline in the prices of mobile phone handsets making them available to many subscribers as well as an increased investment in network infrastructure by service providers.

"The key drivers in these markets include strong gross domestic product (GDP) growth rates, increasing demand for mobile money transfer services and declining handset costs," says the study released last week.

"East African consumers are spending more on mobile communications due to the low fixed-line network coverage, underdeveloped banking systems and the current limited availability of inexpensive handsets."

Significant growth

Operators in Kenya have been enjoying the highest number of active subscribers and revenues among the four countries but the study notes firms operating in the rest of the region would start enjoying the same benefits by 2015.

"Tanzania, Uganda and Rwanda are, however, likely to witness significant growth over the next seven years due to increasing network investments, continuing product innovation and reduced handset costs," the study said.

Industry estimates place the number of active subscribers in the region at 37.6 million and penetration rate of 30.8 per cent, with Kenya accounting for 45 per cent of this number with more than 17 million subscribers.

The number of cell phone users in the region is expected grow at annual rate of 15 per cent and reach 99.5 million by 2015.

Among the major infrastructural undertakings the region include the undersea fibre optic cables. Two of these, the East Africa Marine System (Teams) and Seacom, are already operational while a third one, the East African Submarine System (EASSy) is expected to go live mid this year.

Local telecoms companies have also heavily invested in terrestrial fibre optic cables connecting major urban areas in Kenya as well as select cities across the region.

The fibre optic networks are expected to reduce the cost of telecommunications by 60 per cent over the next seven years, which is in turn expected to boost the demand for Internet access, both through the cell phone and computers.