Forecast: Africa’s smartphone market in early stages of recovery

Africa’s smartphone market bounced back from two consecutive declines to post quarter-on-quarter (QoQ) growth of 4.4% in Q3 2017, according to the latest insights released by International Data Corporation (IDC).

The global technology research and consulting firm’s Quarterly Mobile Phone Tracker shows smartphone shipments for the quarter reached 21.7 million units, spurred by ongoing economic recoveries in some of the continent’s major markets.

Year on year (YoY), shipments were down -5.5%, but this still represents an improvement on the YoY performance seen in the previous two quarters.

In the feature phone space, shipments totaled 33.7 million units, down -3.6% QoQ after increasing for the three previous quarters.

However, YoY, the feature phone market was up 11.5%. Feature phones still constitute a significant 60.8% share of the total mobile phone market as they adequately address the needs of African consumers that have limited purchasing power and require a reliable long-lasting mode of communication, particularly those in rural areas.

Image result for africa smartphoneCombining smartphones and feature phones together, the overall Africa mobile phone market saw shipments of 55.4 million units in Q3 2017, which represents a slight QoQ decrease of -0.7% but an increase of 4.2% YoY.

There were contrasting fortunes for the continent’s two biggest markets, with Nigeria seeing shipments increase 1.7% QoQ while South Africa suffered a decline of -8.0% over the same period.

“The Nigerian economy is slowly coming out of recession and we’re seeing signs of steady improvement in consumer demand for mobile phones,” said Ramazan Yavuz, a research manager at IDC.

“However, consumer spending remained slow in South Africa during Q3 2017 as many consumers opted to delay their purchases until Q4, when major campaigns take place around Black Friday and the lead up to Christmas. In addition, an unstable currency and challenging economic environment do not present favorable conditions for a surge in mobile phone shipments in the country.”

In terms of the vendor landscape, Transsion brands continued to lead the smartphone category in Q3 2017 with 30.1% share, followed closely by Samsung on 26.1%.

“The Transsion Group maintains its position by engaging in aggressive sales and marketing campaigns, and by designing devices that address the specific needs of each local market,” said Nabila Popal, a senior research manager at IDC.

“Samsung’s success in Q3 2017 was primarily due to its economically priced J series, which helped the vendor post a 0.6% QoQ increase in smartphone shipments for the quarter.” In the feature phone space, Tecno and itel continued to dominate proceedings in Q3 2017 with a combined share of 58.9%.

IDC’s research shows that 4G phones are growing in popularity, with shipments increasing 5.5% QoQ in Q3 2017 to finally account for a majority share of the smartphone market at 52.9%. A drop in prices for entry-level 4G phones and an increase in the number of 4G networks across the continent are driving this growth in 4G devices.

Looking ahead, IDC expects Africa’s overall mobile phone market to grow 6.2% QoQ in Q4 2017, spurred by the increase in demand that typically accompanies the festive season.

However, the forecast for the year ahead is not as positive, with IDC expecting overall shipments to remain relatively flat through 2018, with a decline in feature phone shipments and slower uptake of smartphones causing the market to contract -0.5% YoY.

2018 will see global smartphone penetration to hit 66%

In 2018, 66% of individuals in an array of 52 key countries, which includes South Africa along with various developed and developing countries across the globe, will own a smartphone. This number is up from 63% in 2017 and 58% in 2016, according to Zenith’s Mobile Advertising Forecasts 2017, published on 16 October 2017.

Image result for mobile africa in 2018The report also revealed that the rapid expansion of smartphone ownership across the world, which has transformed the way that advertisers communicate with consumers, is slowing down as penetration reaches 80%-90% in the most advanced markets. The number of smartphone owners will increase by 7% year on year in 2018, compared to 10% growth in 2017, 14% in 2016 and 21% in 2015.

The spread of smartphones and other mobile devices is increasing the number of contacts between brands and consumers, by giving consumers new opportunities to connect to media content wherever they are, at any time in the day. Some of these contacts take the form of paid advertising in third-party content, but mobile technology is also enabling broader brand experiences, such as branded content and social media engagement.

Western Europe and Asia Pacific continue to lead the world in smartphone ownership. The report predicts that five markets will have smartphone penetration above 90% in 2018: the Netherlands (94%), Taiwan (93%), Hong Kong (92%), Norway and Ireland (each at 91%). 11 markets will have penetration levels between 80% and 90%, all of them in Western Europe and Asia Pacific with the exception of Israel, where penetration will be 86%.

The country with the highest number of smartphone users will be China, with 1.3 billion users, followed by India, with 530 million users. The US will be third, with 229 million users.

Remittances to become the Fastest Growth App for MNO-led Mobile Money Wallets

Image result for mobile in africaSub-Saharan Africa (SSA) is witnessing a surge migration within the region and to other parts of the world such as North America and Europe. As a continent, Africa had a net migration population of over 11 million in 2015, predominantly economic migration.
• This has been instrumental in the growing volume of international remittances flowing into the region, as migrant workers transfer money to family members in their countries of origin. International money transfers were estimated to be $33 billion in 2016 and were expected to grow by 3.9% over the period 2016-2021, to reach $39.9 billion in 2021.
• Mainstream money transfer operators (MTOs) such as MoneyGram and Western Union dominate the market for international remittances across Africa. Due to their high service cost, consumers have also relied on informal channels, estimated to make up 75% of the total volume of remittances.
• The growing adoption of mobile money services has seen consumers increasingly turn to mobile money for their remittances, largely due to their relative convenience and affordability compared to the services of mainstream MTOs.
• It is estimated that 2.6% of the remittances in 2016 flowed through mobile money wallets, primarily in East African and West African markets, which have a greater uptake of mobile money services. By 2021, mobile money wallets will account for 4.5% of the total value of international remittances.
• The study focuses on the current structure of tower ownership between mobile network operators (MNOs) and towercos and how this is expected to evolve over the long term. The report also provides an overview of the current and expected base of mobile towers in the region, highlighting potential opportunities in the market and competitive structure across selected countries.
• Mobile network operators (MNOs) will need to consider partnerships with clearing and settlement platform providers such as TerraPay in order to drive the use of mobile money-based remittances.
• MNOs with a large SSA footprint should consider creating remittance corridors in the region by enabling international transfers across the operations in which they have a presence as a way to enter the market.
• MTOs face the growing risk of being dis-intermediated by the MNOs’ mobile money wallets, and will need to consider either partnerships with Fintechs or leveraging technology in order to make their services more affordable.
• At a cost of 11.2% of the transaction value, banks continue to be the most expensive channel to send remittances. Processing remittances through mobile money wallets is by far the cheapest option available to consumers at just over a quarter of the cost charged by the banks.

Read the full report: https://www.reportlinker.com/p05226037

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Africa will hit 1 billion mobile internet connections in 5 years

Africa’s mobile internet connections are set to double in the next five years, a study showed on Monday, thanks to affordable smartphones and the roll-out of high-speed networks.

A Somali man browses the internet on his mobile phone at a beach in Somalia's ...A report by research and consulting firm Ovum in London estimates that mobile broadband connections will rise from 419 million at the end of this year to 1.07 billion by the end of 2022.

“Data connectivity is growing strongly in Africa, and there are also good prospects on the continent in areas such as digital media, mobile financial services, and the Internet of Things,” said Matthew Reed, Practice Leader Middle East and Africa at Ovum.

“But as Africa’s TMT market becomes more convergent and complex, service providers are under increasing pressure to make the transition from being providers of communications services, and to become providers of digital services.”

Mobile phone operators such as MTN Group, Orange and Bharti Airtel are investing heavily in high-speed networks to meet demand from users who are increasingly using phones for everything from paying their bills to streaming videos and surfing the internet.