Nigeria, South Africa and Egypt are the big three nations to watch in terms of the emerging African digital economy.
And following them, in order, are Kenya, Tanzania and Tunisia.
That’s according to Angel Dobardziev, Practice Leader and analyst at Ovum.
Speaking to TechEye, Dobardziev said there is “huge potential” in Africa but forecast that the markets there would develop on very different models compared with more mature markets elsewhere.
He explained: “The next opportunity in Africa is in data and internet services. But that will be a very different type of market.
“You have PC/laptop and broadband in the West, and had this before the mobile market took off. This is not something that will be replicated in these areas in Africa. Many people cannot afford a laptop.
“In addition, literacy levels are very low. So a lot of data will be in mobile devices instead – in smartphones. The 3G network is present in a number of these markets, that’s where these markets are going.”
According to Dobardziev, the battle will be providing attractive business models – while customers are able to spend relatively little.
In many parts of Africa, a lot of customers only spend maybe $10 a month, significantly less than in mature markets. So lower cost structures are necessary, such as network sharing, if profit margins are to match those of mature markets.
But Dobardziev highlighted the benefits of operating in this kind of market structure. “The players are trying new approaches not seen in mature markets,” he said. “Inevitably, what you see is lots of innovation as many service providers have to adapt their services and business models so they can target customers and ensure they get a return.”
In addition, there are often other problems to overcome, such as the reliability of infrastructure in Africa – roads and electricity services present a big challenge.
Dobardziev sees the major players in Africa as IBM – which recently teamed up with Bharti Airtel to manage the computing technology and services behind the Indian company’s mobile communications network in 16 African countries – and Vodafone, which has operations in eight to ten markets, including South Africa, Kenya and Egypt.
France Telecom/Orange is also a big hitter, present in 14-15 African countries. Dobardziev described France Telecom as one to watch as the company seems “very keen to expand”.
The second division, or those with a smaller interest, include QTel and Etisalat.
Beyond that, there are lots of smaller players, described as often being single country incumbents, such as Ghana Telecom and Nitel in Nigeria.
Meanwhile, consolidation of the market in Africa has already started, with some independents being bought by bigger players. This will continue.
Dobardziev predicts 3G is going to “very very important” for Africa, along with operators looking at other wireless technologies such as WiMAX. He added: “3G will be a particularly important technology that will be rolling out”.
Asked if he saw a similar situation emerging to that in India with 3G, he explained: “In India, we are seeing an ultra-competitive environment… with a dramatic escalation in a price war…. There’s a risk that this could happen in Africa. In any market where you have four, five or six larger players trying to win the market, that inevitably leads to increased competition.
“It could happen but not to the same extent as India. Many markets have just three or four licensed operators.”
Dobardziev said the potential was there for more players to come into the market, with more 3G licences awarded, but that “they haven’t shown the intention” yet.
He added: “And also, as the market penetration grows, the attractiveness to new players diminishes.”
Dobardziev said there was certainly plenty of opportunity for major companies in the African markets, with economic growth very high and set to stay high.