Mobile subscriber growth remains fastest in the worldMobile subscriber growth remains fastest in the world

Mobile subscriber growth remains fastest in the world, positively impacting telecoms markets as well as African economies at large

• African mobile telecoms have witnessed massive growth over the last decade; subscriptions CAGR reached 42% during 2006-08 and 21% 2009-11. This rapid uptake has been mainly driven by:
? mobile services being a core life enabler to all user segments
? favourable macroeconomic factors flowing to higher consumption
? licensing opportunities and improved regulatory environment
• Telecommunications growth Africa has positively impacted incomes across the continent: in Sub-Saharan Africa, mobile revenues reached $35bn in 2011 representing GDP contribution of approximately 3%
• Recent Deloitte and GSMA research states that a 10% increase in mobile penetration in developing economies is likely to increase productivity by 4.2%
Mobile subscriber growth is maturing and could well saturate in the medium term in some markets if rural coverage does not increase

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• On average, mobile subscription penetration has reached 72% across Africa (3Q12) but country penetration rates vary
• Multi-SIM ownership is widespread and actual penetration of individuals could be closer to 40% to 50% in some countries, potentially leaving room for further growth. For instance this is the case in Nigeria where mobile penetration is above 60% but human penetration just above 26% with multi-SIM ownership at c.2.4 per user
• Further growth in subscriber levels is likely to be driven by; (1) Lower call prices and overall cost of ownership of handsets to gain access to lower income segments; (2) better network coverage in rural areas and operating models adapted to serving such remote connectivity needs; (3) mobile data connectivity (as well as M2M),

Large countries with high subscription growth or comparatively higher ARPU levels continue to be seen as high growth markets

• Subscriber growth remains fastest in central African countries such as in Nigeria or Sudan and is expected to continue being concentrated in regions where penetration is comparatively low
• Whilst subscriber growth is slower in more mature markets such as Egypt or South Africa, these markets continue to concentrate the largest net revenue potential due to higher income levels, large and growing populations and sustained economic growth

The drivers of future subscriber growth

• Further subscriber growth is likely to continue being driven by
? lower call prices and lower overall cost of ownership for handsets, allowing penetration of lower income segments
? better network coverage in rural areas and operating models adapted to serving such remote connectivity needs
? mobile data connectivity (as well as M2M), which has already proved successful in a number of African countries (e.g. SA)
? multi-SIM ownership in countries where it is still increasing

The challenge: revenue-dilutive incremental subscribers

• As mobile operators continue to add subscribers to their network they typically reach out to harder to reach areas or segments and often either poorer subscribers or multi-SIM owners
? incremental subscribers often spend much less than more affluent early adopters of mobile services
? reaching to specific niche segments or to remote areas, where competition may be less strong can be costly, diluting margins