Will Africa Leapfrog to 4G?

Analyst Blog

Dec. 31, 2012, 10:58 p.m.
Jake Saunders, Vice President and Practice Director

Imagine it is Dec-2007, and you are in Kenya, and you heard on the television news that the government made a commitment to assure 100% internet penetration by 2017. Would you bet for or against that commitment?

Fast forward to December 2012, and on the 15th December, Kenya’s ICT board announced it wishes to attain 100% internet penetration within 5 years. The Purpose? To turn Kenya into Africa’s Technology Hub. At present, Kenya’s internet penetration is closer to 30%. How does Kenya plan to achieve this in just 5 years? Partially through fixed telecom upgrade but also through cellular telecoms – not just 3G but also 4G.

To that end, the Kenya government is seeking a collaborative approach to attaining 100% internet penetration. All the country’s mobile carriers have combined to form a joint-venture to roll-out the network infrastructure. Competition would still continue to exist at the retail level.

All these developments are very commendable but it would be foolish to think Africa is going to leapfrog 3G and move straight to 4G. LTE is a complementary technology to 3G. At the end of Sep-2012, 3G penetration only stood at 7.2%. Given the rapid 4G net adds in a number of Developed Markets, why the cautionary outlook for 4G? First of all, more has to be done to release spectrum as well as develop a regulatory framework to allow the re-farming of GSM spectrum bands. More than anything else, 4G adoption will be a function of handset price elasticity. It is likely to be 3 to 4 years before they match current low tier 3G handset price points, and we are not even talking about low tier GSM handset price points.