The challenge of selling mobile terminals in Africa

In Africa, the battle is just beginning. It is today hard to predict if history will repeat. Faced with an uncertain victory, the adjacent services keep on developing on the whole continent.

Soline De Boissieu

Innovation & Digitization

Sofrecom's expertise in Research & Business Intelligence ?

Marketing mobile terminals is a daily challenge for manufacturers and distributors. Where are the opportunities? In Europe and in the USA? The consumers are already over-equipped. In Asia? Too many players for a market whose potential is already much exploited. It has become certain that the future lies in Africa. The sale of mobile terminals is strongly growing there. But it is nevertheless facing challenges that the manufacturers and distributors are trying to tackle through innovation.

Why will the sales of mobile terminals explode in Africa?

According to Deloitte, 660 million Africans own a smartphone: a number which has nearly doubled since 2016 [1]. These are the early stages of a revolution because the GSMA has announced that connections via smartphones will double by 2025 [2].

The boom of the mobile data average monthly traffic

In its last report on mobility, Ericsson indicate that the mobile data monthly traffic will be multiplied by nine by 2024 in Africa and the Middle East. It will only grow by a factor of five at the global level. Concerning the average mobile data monthly traffic per user, it should progress from 2.9 Go to 15 Go in 2024 in the area.[3]

The growth of the African population

These staggering projections are partly due to a significant increase of the African population which should double by 2050. Today one man out of six lives in Africa. According to the INED[4], more than one out of three will live there in a century. Add to the demographic factor a strong economic growth helping Africa optimize its existing infrastructure and develop it. Enough to enchant the manufacturers and operators in the territory.

The barriers to marketing smartphones in Africa

Despite promising forecast figures, operators and manufacturers must face three main obstacles to penetrate this market.

Prices not yet in line with the purchasing power

In Ivory Coast, one of the wealthiest countries of the zone, 86% of the population makes less than 346 900 CFA Francs (528 Euros) per month according to an Ipsos survey. Buying a several-hundred-euros smartphone is therefore not possible for most inhabitants. Marketing low-priced products appears to be essential for mobile telephony operators. Many of them do not have a sufficient budget for massively subsidizing the mobile terminals of their customers though.

Difficult access to energy

Lack of access to electricity in certain regions adds to the price of the terminals. It is, therefore, necessary to market smartphones whose battery life lasts many days.

An aggressive grey-market

Lastly, the grey market is a major problem encountered by most telecom distributors. It is about the marketing of products not controlled by the manufacturer. The price consequently is often inferior to that recommended by the supplier. The operators often notice that grey market sellers stand in front of their shops to sell their own equipment at a much lower price to that offered in store. They benefit from the brand visibility and draw profit from it.

Innovations and strategic partnerships to fight back

Well aware of the issues, distributors and manufacturers are jointly reflecting upon solutions to durably penetrate the market.

The « smart feature phone »

Orange has established a partnership with KaiOS Technologies and China mobile to market a « smart feature phone ». With Sanza, the operator combines the simplicity of a basic telephone (up to 7-day battery life) to features related to a smartphone (Google services: YouTube, Search, Facebook, Twitter, WhatsApp….). This telephone is furthermore sold at an unbeatable price: 18 dollars. With this « smart feature phone » Orange wants to establish its brand as a pioneer in the democratization of internet access.

The « light » operating system

Google also recently engaged in a « light » version of Android adapted to entry-level smartphones. « Android (Go Edition) » enables the users to benefit from a smooth experience in spite of an intermittent connection and a limited capacity smartphone (the RAM is often below 1GB). Android (Go Edition) helps reduce data consumption and ensures better management of the storage space. The applications available on this operating system are also more lightweight and offer customized services. For example, YouTube Go allows its users to download videos in different compression formats, and to watch them offline then.

To conclude

It is now beyond doubt: Africa will be the new eldorado of the telecommunications sector. The operators will naturally seize an important part of the mobile internet market growth mobile by providing access…but the challenges to take up are tremendous to gain a foothold on the market of the distribution of terminals.
In Europe, before the emergence of the « sim only » mobile packages accessible on the web, the operators had succeeded in becoming essential by massively relying on their physical distribution networks.

In Africa, the battle is just beginning. It is today hard to predict if history will repeat. Faced with an uncertain victory, the adjacent services keep on developing on the whole continent. Orange and Vodafone have indeed each launched since 2007 their mobile money service. An ongoing success to this day.

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