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Africa mobile connections overtake W Europe but price wars hit ARPU

Updated:2011/4/1 11:34

The total number of mobile connections in Africa overtook Western Europe during the fourth quarter of 2010, according to figures published on Thursday by Wireless Intelligence.

A new report by the research firm revealed that Africa saw mobile connections reach 547.5 million during the three months ended December 2010, up 19.83% from 456.9 million a year ago. By comparison, Western Europe had 523.6 million connections by the end of Q4 2010, up from 520.6 million in Q4 2009 – an increase of 0.58%.

ARPU meanwhile declined at a similar rate across both regions – down 3% in Western Europe and down 3.29% in Africa. The African slide was triggered in part by price wars in a number of markets, particularly in Kenya, Tanzania and Egypt. Monthly mobile ARPU in Africa stood at $10 in the fourth quarter of 2010, compared to $10.34 a year ago. ARPU in Western Europe was $30.30.

"In Kenya, Airtel started a price war in August last year by slashing voice call rates by 50%," noted Wireless Intelligence in its report. More recently market leader Safaricom in January lowered its on-network SMS rates from 3.5 Kenyan shillings ($0.04) per message to just 1 shilling ($0.01).

In Tanzania, fourth-largest mobile player Zantel – a unit of UAE-based Etisalat – in late February lobbied local regulator the Tanzania Communications Regulatory Authority (TCRA) to intervene in the country's price war. The operator's chief commercial officer Norman Moyo called on the watchdog to introduce guidelines to prevent dramatic price cuts.

"Such guidelines safeguard consumers from unscrupulous operators who temporarily reduce tariffs to lure them from their current operator," said Moyo, in a report by The Citizen. Moyo highlighted that curbing rapacious pricing practices has become a common feature among regulators across the continent.

Wireless Intelligence said the price war that started early last year has led per-second prices to fall as low as 1.7 Tanzanian shillings for off-network voice calls, equivalent to less than one U.S. cent.

Meanwhile in Egypt, France Telecom attributed lower ARPU at its Egyptian unit Mobinil to "tariff inelasticity, aggressive promotions and the addition of new 'bottom of the pyramid' customers".

According to government figures published last week and reported by Reuters, Egypt's mobile user base grew 27.7% in 2010, reaching 70.66 million in December.

 Source:totaltele
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