BMI View: A slight improvement in the average Telecoms Risk/Rewards score for Sub-Saharan Africa reflects the positive impact of consolidation and service-focused growth strategies within the industry, and our expectation that commodity prices will hit their nadir in ---- and result in a slightly brighter macro story towards the latter years of our forecast period. However, the region will remain a global underperformer, as low spending power and operational risks continue to dampen its potential. The Telecoms Risk/Rewards Index (RRI) scores for Sub-Saharan Africa have remained fairly stable in the Q--- update, with the overall regional telecoms score increasing by -.- points to --.- out of ---. Although only a minor positive gain, it is noteworthy because the region s Telecoms RRI score has steadily declined q-o-q over the last two years, partially due to the inclusion of smaller, underperforming markets, but more importantly owing to the impact of mobile market saturation in urban areas and the collapse of commodity prices. The gains this quarter were primarily in the Country Risk category, where the regional average rose from --.- to --.-, as the most painful impact of low commodity prices on GDP growth (or contraction) in ---- has passed. ...Even the most developed countries continue to present high industry risks for operators. For instance, failure to implement spectrum policy has stalled consolidation in South Africa, Kenya s regulator has been unable to reduce Safaricom s dominance and create a more even competitive landscape, and despite re-
...We believe there will be greater in-country consolidation in crowded markets such as Ghana, Cote d Ivoire, Uganda and Tanzania, which will gradually reduce the level of multiple SIM ownership. ...The proliferation of the tower sharing model in SSA also underpins our bright outlook for the -G/-G market, where we forecast subscriptions to more than double from ---mn in ---- to ---mn by ----, to account for --.- of the entire mobile market. Beyond our expectation of accelerating roll-out of -G/-G networks, our view of double-digit y-o-y growth in the -G/-G market throughout our forecast period is also supported by the continued fall in smartphone prices and operators ever broader range of services aimed at luring customers onto more advanced data networks. For instance, in ---- Orange joined MTN and Millicom as a part owner of Africa Internet Group, which operates a number of e-commerce platforms in SSA, including regional leader Jumia. Meanwhile, Airtel Nigeria partnered with Ericsson to launch video- on-demand platform NuVu, bundled with access to zero-rated data. Although over-reliance on zero-rating strategies risks curbing revenue growth prospects from increased data usage, these types of services will nevertheless sustain strong -G/-G subscriptions growth through to ----.
...We estimate that there were approximately ---mn mobile subscriptions in total in Sub-Saharan Africa at the end of ----, for a penetration rate of --.- . This suggests there remains significant room for subscriptions growth over the five years to ----, by which time we forecast there to be ---mn mobile subscriptions, bringing the penetration rate up to --.- . ...This suggests there remains significant room for subscriptions growth over the five years to ----, by which time we forecast there to be ---mn mobile subscriptions, bringing the penetration rate up to --.- . While the penetration rate of less than --- means there remains long-term subscriptions growth potential, our forecasts for a relatively slow rise in penetration reflects two trends which we expect to weigh on net additions over the coming years. Firstly, many countries across SSA, mostly notably Nigeria in late-----, have renewed their efforts to enforce SIM registration regulations. ...
