Nigeria Pushes Middle East & Africa’s Mobile Subscribers to 1Billion

Nigeria will be at the driver’s seat with its over 113 million subscribers, when the Middle East and Africa (MEA) telecom market hits its first one-billionth in March, according to a new research released in the Pyramid Perspective 2013.

The report indicates the milestone will make the MEA region on the second after Asia-Pacific to attain a one-billion mobile subscriber mark. “Four countries – Nigeria, Egypt, South Africa and Turkey- account for 35% of the region’s total subscriptions,” the report stated.

The MEA region is also projected to be home to more mobile subscriptions than all developed regions combined by 2022.

Two leading mobile operators in the region, South Africa’s MTN Group and Etisalat of Abu Dhabi are expected to gain significantly from the market milestone, as their success in the region would draw other global players into the market.

“This projected growth will help raise the global profile of the region’s largest players on the global stage, specifically MTN and Etisalat, and help Western European players heavily invested in the region, such as Vodafone and France Telecom.”

Daniel Amparan, managing director at Pyramid Research noted that “2013 will also accelerate the rate at which emerging market-based players take advantage of financially challenged developed market assets to bring much needed capital, but also commercial innovation and expertise. It will also be a year of important milestones. By year’s end, mobile subscriptions will reach 7 Billion, on par with the global population.”

Significantly also, the report shows that the MEA region still holds enough space for further investment as it currently has a market penetration of only 65 per cent. It is only one of two regions with less than a 100 per cent penetration. The other is Asia-Pacific with 85 per cent.

“User penetration stood at 64 per cent at year-end 2012, suggesting that there is still room for organic growth, particularly in Africa & the Middle East (user penetration of 50 per cent) and in Asia-Pacific (user penetration of 63per cent). Pyramid Research expects 2 Billion new mobile subscriptions to come online worldwide by 2017, of which 89per cent will be in emerging markets.”

The report also indicates that competition will force a market consolidation among leading players, especially in developing markets like Nigeria where there are five GSM mobile operators (MTN, Glo, Airtel, Etisalat & Mtel), with a plethora of CDMA operators, most of which are at the brink of collapse.

“Consolidation has progressed most quickly in recent years in markets where subscriber growth has slowed, competitive pressures are squeezing margins and upcoming capital requirements are high. We believe that the same forces driving consolidation in developed markets will now force the hand of players in emerging markets. In Africa we see potential for consolidation in markets such as Cote d’Ivoire, Ghana, Nigeria, Tanzania and Uganda, each of which is home to five operators or more.”

Forecast for the region are not all happy ending affairs. It stated that with growth already decelerating in the developed markets, and “business models shifting toward data services and the commoditization of voice. The cost of acquiring and maintaining customers is climbing fast as operators expand into underserved areas.”

Consequently, operators like “MTN and Airtel, for example, will seriously consider rationalizing their current footprint and potential for partnerships.” It is also expected that 2013 will witness a possible rapid consolidation via mergers and acquisitions in Nigeria’s troubled CDMA segment.