African Telecom Subscriber Model, Recession Proof

Kato Mivule | March 23, 2009

There is a lot happening when it comes to information technology in Africa but no one can ignore the Telecom revolution in Africa. There is no doubt that the Cell Phone has revolutionized communication and business in Africa.

The Total Telecom subscribers in Africa has grown to 340 million users outnumbering Mobile phone users in the USA, and making Africa the fastest growing Telecom market in the world.



The current Global Economic Crisis is not doing much to curtail this growth. Maybe Western Telecom Conglomerates could borrow a leaf from the African Telecom Success. I believe Wal-Mart is watching, at least…

Mobile Telecom companies have made cell phones cheap that those with low income can afford to subscribe and own a mobile phone head set. Most of the subscribers are the ‘Pay As You Go’ clients and Telecom companies make money with ‘Air Time’ that clients purchase now and then. This Model is far different from the American Model were subscribers have to sign contracts and pay monthly bills.

However, the ‘Pay As You Go’ model is beginning to gain momentum in the USA as the Economic Crisis deepens. Clients in the West find that they don’t need to spend money on airtime they will not use. The African Telecom ‘Pay As You Go’ Model has proven to be ‘Recession Proof’. Clients only pay for airtime that they will use, no monthly bills, no contracts, but just an initial one time subscription fee.

In the initial stages Telecom companies in the early 1990s only catered to the wealthy and affluent urban populations in Africa. In Uganda for example, the Cell Phone then was considered a “rich man’s thing’. Subscriptions were low as only the wealthy could afford high monthly bills, contracts, and expensive headsets. Telecom companies then saw the opportunity to sell their products to low income earners minus ‘strings attached’ and at the same time made customer service priority so as to retain clients.

Most recently Europe’s Orange Telecom seized the moment and has invested in the African Telecom market, targeting the unreached African Populations, according to a recent interview done by Orange’s Telecom Executive with New Vision, a Uganda Government Daily Newspaper. Orange projects itself gaining 40 percent of Uganda’s Telecom market, targeting mainly the unreached – rural areas…

The question is how Uganda can use this current Telecom boom to implement growth and development, and alleviate poverty. How can the current Telecom Revolution be translated to other areas and sectors of Uganda’s economy? Will this Telecom boom last? Will it be sustainable? I believe it will Plateau at a certain point and the success of Telecom companies in Africa will depend on the unique products and services that they will offer across the current Telecom infrastructure in Africa.


NOTES Cell phones power financial revolution in Africa
McClatchy | February 10, 2009
http://www.mcclatchydc.com/world/story/61909.html

African mobile subscribers reach 280m
Wireless Federation | May 2, 2008
http://wirelessfederation.com/news/11104-african-mobile-subscribers-reach-280m/

Africans get upwardly mobile in cell phone boom
CNN | August 14, 2008
http://www.cnn.com/2008/TECH/08/07/mobile.phone.poverty/index.html

Orange eyes 40% market share
New Vision | Sunday, 22nd March, 2009
http://www.newvision.co.ug/D/8/220/675448