In the dynamic realm of telecommunications, the discussion on roaming rates in Africa has gained keen significance. With the continent witnessing swift technological and connectivity advancements, the pivotal question arises: are roaming rates trending upward or downward? This inquiry holds profound implications as mobile communication dynamics impact a spectrum of communities and businesses, ranging from busy urban hubs to secluded rural expanses. Unraveling the current state of roaming rates in Africa and deciphering the forces shaping their trajectory not only illuminates the industry's course but also unveils key insights into how consumers navigate this evolving landscape.
The evaluation of the Africa roaming tariff market is projected to reach USD 2.5 billion by 2027, with an estimated compound annual growth rate (CAGR) of 5.5% throughout the forecast period. Roaming tariffs represent the fees incurred by communication service providers when granting customers access to their communication devices beyond the geographical coverage of their network. These tariffs exhibit variations on both national and international scales. The market is experiencing a positive impact due to the increased adoption of smartphones and the internet. Furthermore, the rising number of international travelers is expected to drive the demand for roaming tariffs in Africa. Notably, different tariffs are applied to services such as voice, data, and SMS.
Moreover, the African market for roaming tariffs is poised for substantial growth in the forecast period, fueled by a growing mobile subscriber base and increasing internet penetration. The rapid increase in smartphone users across the continent, as exemplified by the GSM Association's projection of SIM connections reaching 1.0 billion by 2025, up from 774 million, indicates a robust technological awareness among consumers. This surge is particularly pronounced in Sub-Saharan Africa, where mobile subscriptions are anticipated to constitute 50.0% of the total population by 2025, according to the GSMA. Notably, countries like Nigeria, Ethiopia, the Democratic Republic of the Congo, Tanzania, and Kenya are pivotal contributors to this growth, with subscriber penetration in the ECOWAS and SADC regions expected to rise significantly.
Mobile Network Operators (MNOs) and network providers are actively investing in the region, with initiatives aimed at expanding the customer base. The KaiOS 'smart feature phone' initiative, spearheaded by major operators like Vodafone Group and AT&T Inc., is expected to drive smartphone adoption. Additionally, the introduction of the One Network Area (ONA) roaming initiative in East Africa is designed to reduce high roaming tariffs, fostering regional integration. Notably, regulatory measures, including the elimination of roaming tariffs on incoming calls in specific countries, such as Rwanda, Kenya, Uganda, and South Sudan, are part of ONA, indicating a concerted effort to boost the market for roaming tariffs. Similar regulatory initiatives are emerging across Africa, promising to be key drivers of market growth from 2020 to 2027.
Recent Developments and Challenges in the Region
In recent developments, Bharti Airtel Ltd. expanded its 4G network in the Democratic Republic of Congo, Africa, through the acquisition of a 58-megahertz (MHz) spectrum spanning 900, 1800, 2100, and 2600 MHz bands in June 2022. Simultaneously, The Posts and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) unveiled plans in the same month to monitor telecommunication traffic for revenue assurance purposes. Additionally, IHS Holding Limited acquired 5,701 towers from Mobile Telephone Networks Proprietary Limited (MTN) in South Africa. In April 2022, a significant partnership was established as MTN Ghana and Vodafone Ghana signed an agreement to conduct national roaming tests in the Volta Region. These developments underscore the dynamic nature of the telecommunications landscape, with key players making strategic moves to enhance their networks and services.
Furthermore, in West Africa, regulators are actively enhancing international roaming services. Senegal's ARTP and Mauritania's ARE recently signed an agreement to reduce cross-border interference, improving network quality along their shared border. Similarly, Ghana and Togo have inked a mutual free international roaming deal, complying with ECOWAS regulations. This initiative is expected to substantially reduce call and data roaming charges, making communication more affordable for users in these regions. The agreement is set to be implemented on March 1, 2024.
In addition, addressing regional challenges in the evolving African market necessitates resolving both structural and technical impediments. The premature introduction of roaming regulations amid these existing obstacles could yield unintended and adverse consequences, impacting the telecommunications industry, mobile users, and government revenue. Tackling structural barriers involves the imperative legal and technical advancements to eliminate double taxation, counteract fraud, and liberalize international gateways.
These barriers artificially raise roaming charges, highlighting the need for preventive measures before implementing roaming regulations. Despite intensified efforts, fraud remains a major financial concern, requiring increased investments in technology and negotiated roaming agreements for effective mitigation. The liberalization of international gateways is crucial, as non-liberalized gateways significantly contribute to overall roaming expenses, limiting operators' bargaining power.
Additionally, international long-distance termination charges inflate end-user prices, with some African countries grappling with gateway monopolies. The issue of double taxation further compounds retail prices, impacting the industry, mobile users, and government revenue, especially given varying VAT rates across sub-Saharan Africa and additional local taxes in many countries.
Overall, Africa's roaming landscape is evolving with promising developments in international collaboration, technological advancements, and regulatory initiatives. The projected growth of the roaming tariff market reflects the region's expanding mobile user base. While regulators and countries in West Africa are taking steps to reduce roaming charges, careful consideration is needed to avoid unintended consequences. Africa's commitment to connectivity and economic growth is evident, and continued efforts will shape a future where roaming rates align with broader goals across the continent.
By Elza Moukawam, Journalist, Telecom Review
