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Africa’s Telecoms

e-Conomy Africa 2020, a new report released in November by Google and the International Finance Corporation (IFC), estimates that Africa’s Internet economy has the potential to benefit 5.2% of the continent’s gross domestic product (GDP) by 2025, contributing nearly $180 billion (R2.8 trillion) to its economy. The report also suggests that every reduction in the digital divide (that is – each increase in reach) will grow GDP. The more countries increase their internet reach, the more their national GDP will grow.

The U.S. International Development Finance Corporation (DFC) has made a $300 million investment in the data storage arm of Johannesburg-based Liquid Telecom. Zimbabwean telecoms billionaire Strive Masiyiwa, whose Econet Group controls Liquid, has already staked the potential of investment into data centres in South Africa, Kenya, and Nigeria. The African region’s data centre market, which currently accounts for just 1% of global available capacity, is expected to grow to $3 billion by 2025, building on a robust growth rate of more than 12% per year.

Previously we reported that the Ethiopian government planned opening its telecom market to competition through the partial privatization of Ethio Telecom and the awarding of 2 new telecom licenses. The government has now set February 2021 as the new deadline for completing this project.

Meanwhile in Kenya, the launch of the cheap Kaduda 4G feature phone was recently announced by Telkom. This product will help address the growing demand for competitively-priced Internet-enabled devices. The phone allows users to access the Internet via Wi-Fi or 3G/4G/LTE. During the pandemic imports of PCs and smartphones shot up to $74 million according to the Kenyan government. Good news from Ghana where telcos have reduced their call and data tariffs to reflect the reduction in the Communication Service Tax (CS) from 9% to 5%. TOGOCOM has activated its commercial 5G network and now offers clients a very-high-speed mobile connection. The 5G network, made possible by Nokia, is now fully operational in Lome.

However, some bad news – after-tax profits at Safaricom fell to Ksh33.07bn in the 6 months to September from Ksh35.2bn the year before as M-Pesa and voice revenues declined (although mobile data usage increased). Outgoing voice calls account for 33.9% of Safaricom service revenue while M-Pesa accounts for 30.3%. As this Newsletter reported, Safaricom scrapped charges for M-Pesa transactions under Ksh1,000 in support of the government’s policy to reduce physical cash-transactions, but that decision saw M-Pesa revenue decline by 14.5% year-on-year. The firm said it had enabled “zero-rated” M-Pesa transactions worth KSh1.76trn during the pandemic. Voice declined 6.5% year-on-year as the growth in customers and usage prompted by COVID was offset by customers paying lower rates per minute. Total revenues declined by 4.1% to Ksh124.5bn, while interest before taxes, depreciation and amortisation fell 7.3% to Ksh63.4bn. COVID has accelerated the continent’s telecoms revolution by boosting customer registration and data usage, but Safaricom’s performance indicates that some telecom’s consistently bankable services are vulnerable.

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Shahrain Coovadia

Shahrain Coovadia is a Cyber Security Consultant at Deloitte, South Africa. Prior to joining Deloitte she started a web-design studio, and worked at the University of Cape Town as a teaching facilitator. Shahrain graduated from the University of Cape Town with a Bachelor of Commerce Honours specialising in Information Systems. She currently facilitates web & database management for Ecommerce Forum South Africa (EFSA).

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