Mobile phone market set for greater heights

Source: http://www.standardmedia.co.ke/InsidePage.php?id=2000001228&catid=457&a=1

East African mobile communication markets are poised for more growth driven by cheaper handsets and network investments, a new study says.

An analysis from Frost & Sullivan, a global growth consulting company says Kenya, Tanzania, Uganda and Rwanda markets earned revenues of Sh197 billion ($2.62 billion) in 2008, and estimates this to reach Sh679 billion ($9.03 billion) in 2015.

Kenya enjoyed the highest number of active subscribers and revenues 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 US firm.

Technologies covered in the just released markets study are code division multiple access (CDMA), global system for mobile communications (GSM), general packet radio service (GPRS), high-speed downlink packet access (HSDPA) and wideband code division multiple access (WCDMA).

"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," says Frost & Sullivan Research Analyst Jiaqi Sun.

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. Sun says 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," Sun says in the Analysis.

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.