Prices for Voice Minutes and GPRS Very Different in Africa vs. India

As you might have noticed, I've been doing some research into GSM voice + mobile Internet in Africa lately. When comparing the results to prices in India, however, I was quite surprised.

Compared to the average price for a voice minute in Africa of around 10-15 Euro cents today, Indian carriers sell their voice minutes for around 2-3 Euro cents (taxes and recharge fees included, see an example of Airtel here and of BSNL here). Also, GPRS is much cheaper.

Assuming that the cost of running the networks in both regions is similar (just an assumption, please prove me wrong), I can't quite explain the difference. It's not missing competition, most African countries have 3 or 4 GSM networks today. It's not missing profitability either. EBITA of African and Indian wireless carriers are quite o.k. (see fore example the results of Airtel for 2008). Any ideas?

Focus Africa: Mobile Internet

There are quite a number of initiatives these days that aim at bringing the Internet to developing countries. From my point of view the ones which I think will have to most success are those using the infrastructure that is already there, the GSM networks. Satellites with local distribution over Wi-Fi might be an option in the future, too, but I think that will still too expensive and would only be available near the satellite downlink. Initiatives like OLPC and meshed networking might change that but I don't see that in the short- or mid-term. GSM networks in the other hand are already there today so I did some research into how available and affordable the mobile Internet is in Africa today.

There are about 300 million GSM subscribers in Africa today and a sizable portion of those phones should be capable of running the OperaMini browser. In the monthly analysis of the state of the mobile web for September 2008, Opera has a focus on Africa with some interesting numbers:

Out of the 65 TB of compressed data consumed by 19 million users in September 2008, 5 TB was consumed from Africa. That would be around 8% of worldwide traffic, or about 1.5 million users. Note that this is only a rough assumption as it's based on an average and doesn't take things into account such as higher or lower use compared to the average for various reasons. But the number itself is already quite impressive even though this means that currently less than 1% of African GSM subscribers would use OperaMini.

So where is GPRS or EDGE available in Africa and how affordable is it? I've checked in the countries in which I also checked for voice rates for the previous post in this series:

  • Kenya – Safaricom: They have EDGE in their network and even 3G is available in some places. I couldn't find prices per kb but they do offer a 3G USB dongle and the price per MB if you buy the smalles bundle (300 MB) is 10 Euros or about 3 euro cents per MB. However, USB dongles and 10 Euro recharges are probably only for a select view. Also, I didn't see any promotion on their web pages for mobile Internet use on the phone yet.
  • Côte d'Ivoire – MTN: They are promoting a EDGE USB dongle and unlimited monthly access is 15 Euros.
  • Uganda – MTN: Around 1 euro per megabyte, billed per kb. According to this report, Opera Mini seems to be involved with MTN's mobile Internet offer.
  • Egypt – Vodafone: They run a mobile Internet promotion with OperaMini. Daily access to the Vodafone mobile portal and 3 MB off portal (with OperaMini that's a lot) is 14 euro cents. According to this report, the offer has triggered 400.000 OperaMini downloads in just a month. Impressive! I am looking forward to the Opera Mini statistics with a focus on Africa to see what kind of longer term impact this has made.

Summary: While the mobile Internet seems to have arrived in many countries in Africa, prices are still quite expensive, especially for the region. But it's likely that things will probably change in the not too distant future and the Vodafone Egypt example is hopefully a trendsetter.

Are you using the mobile Internet in Africa or would you like to share your views? If so leave a coment below.

Focus Africa: Cost of Mobile Voice Calls and SMS

While reading "Less Walk More Talk – How Celtel and the Mobile Phone Changed Africa" I did some background research on how much mobile telephony actually costs in sub-Saharan Africa. I expected very cheap prices compared to high income countries but I was very much surprised by the result.

Here are three very different examples in terms of African countries I selected for my background research. Fortunately, the web pages of all network operators were either in English or French and the Yahoo currency converter made it simple to convert the prices given in local currency into euro cents. Like in other countries, each mobile network operator has a number of different prepaid plans to choose from, each with advantages and disadvantages. For my examples below, I took the general basic plan:

Kenya – Safaricom:

  • On-net calls: 8 Euro cents / min
  • Off-net: 15 Euro cents / min
  • SMS: 3.5 Euro cents

Nigeria – MTN:

  • Voice calls: 15-17 Euro cents a minute, billed by the second
  • SMS: 2.6 Euro cents on-net, 8 euro cents off net

Côte d'Ivoire – MTN:

  • Voice calls: 27 Euro cents / min
  • Calls to friends: 9 Euro cents / min
  • SMS: 6 Euro cents
  • Minimum use per month: 7.6 Euros

Côte d'Ivoire – Orange:

  • Voice calls: 15 Euro cents / min
  • Preferred numbers: 5 Euro cents / min
  • SMS: 5 Euro cents

So while SMS messages are generally much cheaper than in Europe, voice calls are quite expensive, especially when taking local salaries and standards of living into account. I've also checked out ARPU (Average Revenue Per User) levels, which probably still mean something in Africa, and they are in between 6 and 10 Euros a month. In many African countries that's probably a significant amount of money to most people but the convenience and live improvement seems to be worth it. And by the way, mobile telephony is by no means only for a few anymore, there are currently more than 300 million mobile subscribers in Africa, that's more than in North America!

In one of the following posts, I'll take a look at prices for GPRS and 3G (!) in Africa and at some statistics of how many people already use it.

Book Review: Less Walk More Talk – How Celtel and the Mobile Phone Changed Africa

Less walk
It doesn't happen often but every now and then I see a book, and without opening it, the title just does it and I have to buy it. It happened again at the Mobile World Congress. While doing my book presentation at the Wiley booth, I spotted "Less Walk More Talk – How Celtel and the Mobile Phone Changed Africa" by Russell Southwood.

In an instant I decided that the only thing I knew about mobile telephony in Africa came from a number of stories I heard at conferences and read on some web sites. So I thought no matter which approach the book takes it's probably very interesting and I will learn a lot. I was not disappointed. 

While I first speculated that the book would tell me about all the things mobile telephony has done for people in Africa, it is actually the story of Mo Ibrahim, who, with comparatively little money he made by selling his first startup company, founded Celtel to bring mobile telephony to Africa, his birth continent. What started in one country soon spread to many and the book has many anecdotes from Mo and others who have worked in Celtel over the years.

The book clearly shows that Africa is one of the hardest places in the world to do business. Although stories of finding oneself in a a war zone and waiting for British marines to fly you out to an aircraft carrier off the coast to impossible negotiations with governments to take a microwave link across the Congo river into service to link mobile networks in two countries instead of routing a call between people only half a mile away from each other via a satellite link to London and back, most of the stories have a good ending and show that with persistence and sometimes also luck, things can turn for the better. The book also deals with corruption and how Celtel always went out of its way to steer clear of it, because there was the strong believe that nothing good would come out of it.

Another thing that surprised me were the timelines. Celtel started with its first network in 1999. I still remember that time in Europe, GSM was still quite early in its success measured by today's standards and yet, Celtel and others took it to Africa. The book also tells the story of how difficult it was to find investors who were willing to bring money into Celtel so it could spread across the continent to compete with its rivals, MTN and Vodacom. Superbly written and it helped me understand the business world a bit better, not only concerning Africa, but also in general.

In the end, Celtel was sold to MTC for over 3 billion US dollars and since then it has been renamed into Zain. Mo Ibrahim has taken his share and has retired from the company, now operating networks in 15 African countries. He now heads the Mo Ibrahim Foundation, which promotes good governance in Africa and has supporters such as Kofi Annan and Bill Clinton.

I've learnt a lot by reading this book, not only about how companies are created or about mobile telephony in Africa, but also a thing or two about Africa itself. It's changed my view on a number of things and I am very thankful for that. It has also triggered some background research which I will discuss in a future post or two.