High demand spurs mobile market growth

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

Kampala
The East African mobile communications market is expected to show strong growth based on increasing demand for mobile communications and cheaper handsets.

According to a report released by Frost & Sullivan -, a global growth consulting company - Kenya, Tanzania, Uganda and Rwanda markets earned $2.62 billion in 2008, and estimates this to have doubled by 2015.

Kenya witnessed the highest number of active subscribers and revenue among the four countries.
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, according to the research.

“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,” Frost & Sullivan Research Analyst Jiaqi Sun said recently.

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

Mr Sun said there are 37.6 million mobile subscribers in East Africa, at a penetration rate of 30.8 per cent.
The number of subscribers, according to the analysis, is expected to reach 99.5 million in 2015, at a compound annual growth rate of 14.9 per cent.

“The undersea cables are anticipated to reduce the cost of telecommunications by 60 per cent over the next seven years. This will boost demand for mobile internet access,” Mr Sun said.

However, there are challenges faced by the market participants such as high tax rates on mobile services, lack of network rollout in rural areas and low demand for data services.

Technologies covered in the just released markets study include; code division multiple access, global system for mobile communications (GSM), general packet radio service (GPRS), high-speed downlink packet access and wide-band code division multiple access.