"Nigeria Is Driving Force Behind Africa's Telecoms Expansion", Industry Report
In a report released by Investor Services, Moody's said Nigeria is the key to the growth of the telecommunication sector in Sub-Saharan Africa (SSA). Moody's anticipates Nigeria to lead the sector's growth in Africa because of its vast population, limited internet and mobile phone penetration compared to its people.
The analysis, titled "Sector In-Depth: Telecommunications-Africa," indicated that while African telecoms would gain from rapid growth, they would also be subject to rising sovereign concerns.
According to the report, growth will be highest in SSA nations with significant populations and low mobile penetration rates, such as Nigeria, Ethiopia, the Democratic Republic of Congo, Tanzania, and Kenya. They estimated the growth of mobile subscribers to be around 150 million over the next five years. Stating that demand for telecom services will spread as mobile network operators target Africa's massive underbanked population with mobile money solutions, offering another source of revenue growth and customer loyalty.
According to Moody's, SSA's mobile phone penetration has increased quickly since 2011, although still among the lowest in the world. Good news for MTN, the largest operator in Nigeria and Uganda by mobile subscribers; the second-largest operator in Nigeria, Uganda, DRC, and Tanzania; Vodafone, through its majority ownership of Vodacom, Orange, the third-largest operator in DRC and Bharti Airtel, through its majority ownership of Airtel Africa the second-largest operator in Nigeria, Uganda, DRC, and Tanzania. Africell will also benefit positively, as the company has a license to operate in Angola until 2021. Ethiopia is a closed market, but a consortium led by Safaricom and Vodacom was issued an operating license in May 2021.
In contrast to stagnant earnings in established home markets, investments in Africa present growth potential for international telecom corporations. Vodafone Group Plc, Orange, and Emirates Telecommunications Group (Etisalat) have invested in Sub-Saharan Africa to diversify away from their mature domestic markets. SSA revenue provides for 11 per cent to 14 per cent of total income for these operators, but it accounts for the majority of growth.