Handset makers compete for data-enabled African market

The subscriber base for voice communication is still growing but the growth curve has begun to flatten

As mobile service providers compete for the data market in Africa, manufacturers are scrambling for deals to supply data-enabled handsets, a move that will likely reduce the cost of mobile devices in the region.

Africa's subscriber base for voice communication is still growing but the growth curve has begun to flatten in the region's more mature markets, forcing operators to compete more aggressively on the provision of data services even in rural areas.

Large operators in the region including Zain, MTN, Orange, Foris Telecom and Safaricom are competing for a share of Africa's data market following improved communication infrastructure in the region.

As a result, mobile operators are moving to upgrade their networks to 3G mobile Internet technology while others are upgrading to 4G networks in the next few months. Handsets manufacturers including Samsung, LG, Nokia, and Sony Ericsson are now scrambling for supply contracts of data enabled handsets in a bid to satisfy demand.

Increase in the innovative offering of social networks, checking and sending of e-mails through mobile phones is said to have fuelled the demand for data enabled handsets as users can now access faster internet despite a customer's location.

"The 3G mobile technologies, coupled with improvements in international fiber and national backbones network infrastructure are now capable of delivering broadband Internet access in the region," said Zambian Minister of Communications and Transport Geoffrey Lungwangwa.

In Kenya as in many other African countries, handset manufacturers are competing for supply contracts with government agencies, telecom operators and non-governmental organizations after Nokia won a contract to supply 20,000 handsets to an election agency for use in the referendum. Kenya's Interim Independent Electoral Commission (IIEC) used the handsets to relay data from grassroots participants.

In Zambia, the Electoral Commission of Zambia (ECZ) is using data-enabled handsets to inform potential voters on how and where they can register as voters for the 2011 presidential and general elections.

Mobile data, driven by mobile e-mails and broadband services, is anticipated to generate US$2.2 billion in revenue in the region by 2014 boosted by a number of undersea and land-sea cable projects that are providing much-needed extra capacity for operators. Mobile data and broadband technologies are increasingly being used by operators as a substitute for poor or non-existent fixed-line infrastructure in the region.

As in many regions in the world, Short Message Service (SMS) accounts for the bulk of Africa's traffic and revenue. Handset manufacturers are targeting companies and government agencies who buy the handsets in bulk as they benefit from heavy discounts and enjoy the bundling of the handsets with data from any of the operators.

"We don't feel threatened by the supply of handsets from other manufacturers because their products are different from LG," said Ki Wan Kim, LG regional CEO Middle East and Africa.

Operators claim that the quest for increased data penetration and usage in the region have been constrained by lack of data enabled mobile phones. But that may be changing.

In Kenya, Mobicom, Telkom Kenya's largest dealer, has already entered into a deal with Nokia, Samsung, and Motorola where the company is offering free data-enabled handsets for any customers buying airtime worth about US$US13.

Meanwhile in Zambia, the rollout of the 3G network by Zain -- expected to increase data penetration -- is in progress.

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Tags Foris TelecomSafaricomPhonesNokiaMTNorangeMobile handsetssamsungconsumer electronicsZainSony Ericsson

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Michael Malakata

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