A busy AfricaCom is testimony to the continent’s rapidly-evolving telecoms market

This year’s AfricaCom conference and exhibition, which was put on by Informa Telecoms & Media in Cape Town on 9-10 November, was bigger and busier than ever before, demonstrating the vibrancy and potential of Africa’s telecom market.

But the regional industry isn’t just growing – it is also beginning to undergo some potentially profound changes, as data services become ever-more important and new, non-operator players take an increasingly prominent role.

The conference organizers sought to reflect those changes by inviting speakers from outfits including Google, Facebook, Mxit, Ushahidi/iHub and YouTube – as well as the operators and vendors that traditionally dominate this type of event. Some of those names might be unfamiliar: Mxit is a South African mobile social networking service; Ushahidi was set up in Kenya as a crowd-sourcing platform following the civil unrest in that country after disputed elections in December 2007; and iHub is a technology incubator in Nairobi.

Of course, there is continuity as well as change. There is continuity in that Africa continues to offer strong growth prospects in the basic business of mobile subscriptions. Africa now accounts for one-third of Orange’s subscribers, said Marc Rennard, Orange’s EVP for Africa, Middle East and Asia at the conference, and prospects for continued growth on the continent are “bright”, not least because of population growth and the expansion of the middle class.

Vodacom is also seeing continued growth in subscriptions, particularly in its non-South Africa markets, said Johan Dennelind, CEO of Vodacom International. Vodacom’s international mobile subscriptions were up by 22.5% over the year to end-September, according to the company’s most recent results statement.

Also relatively conventional is the fact that competition is becoming tougher as African markets mature. Orange is putting in place a number of initiatives – including the establishment of shared-services centres and a pilot infrastructure-sharing initiative in Uganda – to improve the cost-efficiency of its operations, said Rennard. In addition, African customers are becoming more discerning, so operators must raise the standard of their offerings, according to Rennard.

However, Orange is also experiencing strong growth in the use of data services in Africa – and the use of Facebook on the continent is “booming”, said Rennard. Vodacom is also experiencing “tremendous” growth in internet use, said Dennelind. That is borne out by Vodacom’s recent results, which showed that across the Vodacom Group, mobile data revenues in the six months to end-September were up 31.1% year-on-year and accounted for 14.1% of service revenues.

And it is the strong growth in data and Internet use in Africa that is bringing about the most significant changes, as it is opening the door to new, non-traditional players, from beyond the continent as well as within. Perhaps the best-known of these over-the-top (OTT) players is Google.

The increasing availability of data networks and of more powerful devices, such as smartphones, has led to a “democratization” of online content, according to David Ahlsten, Google’s Nairobi-based new-business developer for Africa. Google’s activities in Africa include the launch of Gmail-SMS services in a number of countries on the continent. Google subsidiary YouTube has developed localized versions of its service for a number of African countries.

Operators should encourage further use of data through innovative pricing, said Ahlsten. Many Africans buy access to data in prepaid sachets, and bonus data allowances for regular users might be one way to encourage the further take-up of services.

If Google represents international OTT players that are big in Africa, a good example of a local OTT player is Mxit, which is the largest social networking service in South Africa with about ten million users, more than double the number of Facebook users in the country. Mxit has been successful because it has created a sense of community and because it has been designed to work well in a market that was dominated by basic handsets and limited data capacity.

Most Mxit users have only feature phones – and a substantial number do not even have feature phones, said Mxit COO David Weber. Only 1% of Mxit users have a smartphone.

However, World of Avatar, the mobile apps developer that has recently bought Mxit, recognises that the service will have to change if it is to stand up to competition from services such as WhatsApp and BlackBerry’s BBM. A key priority for World of Avatar is to develop a smartphone interface for Mxit, said Weber. That is just as well because World of Avatar CEO Alan Knott-Craig Jr. caused a stir when he admitted that he does not use Mxit because it does not work well on his iPhone.

World of Avatar also plans to launch the Mxit service elsewhere in Africa and possibly in other emerging markets, said Weber.

Erik Hersman, founder of Nairobi-based Ushahidi and iHub, said that MNOs are no longer the innovative forces that they were in the 1990s. Innovation is now coming from the mobile Web instead, he said. Big international companies are driving the diffusion of the Internet in Africa – but local, grass-roots actors are important too. Nairobi-based incubator m:lab has developed ventures such as MFarm, an information service for farmers. Cape Town-based mobile social networking platform Motribe launched services in 2010.

Even M-pesa, which is usually held up as a leading example of operator-led innovation, did not escape critical comment from Hersman. Although Safaricom’s achievements with M-pesa are impressive, the system is a closed one and that is limiting, he said. A better strategy would be to re-launch M-pesa as a universally-available service.

But MTN Group CCO Christian de Faria was right to point out the constraints on change. Many Africans are living on an income of US$1 per day. The vast majority of those with a mobile phone have only a basic device. Even so, many choose communications over other priorities.