Govt tax subsidies for mobiles in SA?
Frost & Sullivan, the business research and consulting firm believes that mobile operators in Sub-Saharan Africa should engage governments to offer tax subsidies on mobile phones, laptops and smartphones that are required to access internet services.
F&S notes that broadband penetration in African countries is significantly low, with a majority of countries recording penetration levels of less than 5%. This has had a considerable impact on internet usage levels in the region.
African countries however, have experienced a steady uptake of mobile communications and are poised to witness an appreciable growth of mobile, broadband and internet services over the next 4-5 years, it said.
New analysis from the research firm, through its Sub-Saharan African Communications Quantitative Quarterly Tracker Q3 2012, found that the market had 181.7 million mobile and fixed telephony subscribers and 29.8 million internet subscribers in 2010.
It is estimated that this will reach 266.1 million mobile and fixed telephony subscribers and 77.5 million internet subscribers in 2017. This expansion will be driven primarily by demand and uptake of mobile voice and internet services, F&S said.
“The growth of voice and internet markets in Africa is expected to be driven by a decline in retail price for these services,” noted Frost & Sullivan’s ICT business unit leader for Africa, Chantel Lindeman.
“Operators in the region are investing significantly in mobile infrastructure, including base stations and transmission networks. It is expected that this will result in the availability of higher network capacity at lower cost, with operators spurring growth by passing savings in network costs to the end users of services.”
F&S pointed out further that operators are investing in shared terrestrial fibre optic infrastructure to increase transmission capacities and connect end users to undersea cables. They are also adopting infrastructure sharing at base stations to minimise the overall cost of delivering services to end users.
Cost minimisation, the group said, is likely to translate to lower retail prices of voice and internet services and push up demand and uptake levels.
The key challenge to growth and increased penetration of voice and internet markets in Africa is the low disposable income of a majority of consumers. The cost of devices required for the uptake of internet services is generally perceived to be high.
As a result, operators in the region are likely to experience significantly low levels of new subscription to voice and internet services in the short-term, F&S said.
The group forecast that, in order to facilitate wider uptake of mobile voice and internet services, African operators are likely to analyse models utilised in developing markets in the region.
“Operators should learn from experiences in the uptake of mobile telephony services in African countries, such as Kenya, that have experienced notable penetration levels,” advised Lindeman.
“They should engage governments to offer tax subsidies on mobile phones, laptops and smartphones that are required to access internet services. In addition, operators can extend their range of internet access packages to meet the budget capabilities of more consumers.”
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