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. Last Updated: 07/27/2016

Mobiles Answer Africa's Phone Needs

NAIROBI, Kenya -- Once the preserve of a rich Western elite, mobile phones are booming where you would least expect them - in the world's poorest continent.

Africa has become one of the fastest growing markets for cellular phones, with new local firms and foreign multinationals scrambling to tap the pent-up demand for cheaper and more efficient communication technologies.

Almost 20 new mobile networks were launched in Africa between 1997 and 1998. The number of cellular subscribers in the continent neared the 2 million mark in 1997 and is forecast to exceed 5.5 million by 2000.

Tanzania has five mobile operators - one more than Britain - and in war-racked Rwanda cellular phones outnumber traditional land lines. The infant cellular industry has an average use rate above those of Europe and the United States.

"Quite simply, Africa is the last continent with significant telecoms growth potential," says Andre Wills, research director at Africa-wide telecommunications consultancy BMI-TechKnowledge, or BMI-T.

In many African countries, 20 percent to 30 percent of total telephone lines are now cellular lines. But the figure is as high as 58 percent in countries like Rwanda, where war has caused the near collapse of existing land line infrastructures.

The same is true in Somalia where, in the absence of a central government, private entrepreneurs are driving an economic revival after years of civil war.

"Business is very good, and we will soon be able to cover the whole of Somalia," said Abdullahi Hussein Kahie, manager of telephone company Barakaat in the capital, Mogadishu.

Since establishing land lines and mobiles in 1997, Barakaat - backed by local investors - has signed up 6,000 customers, helping businessmen deal with foreign partners and providing communication links with the Somali diaspora.

Beyond these extreme war-torn cases, Africans are turning to mobiles to serve their basic communications needs - frustrated by unreliable fixed-line phones in many parts of the continent.

Africa's average teledensity, or the number of main telephone lines per 100 inhabitants, is below two. Faults on traditional lines are common, connections break down easily, bills are often wrong and the maintenance service poor.

"In many areas, you can be on the waiting list for a fixed-line phone for months, if not for years," BMI-T's Wills said. "With a mobile, you can get a connection in 24 hours. It's a digital network, so the quality is better and more reliable - it's expensive but it's the service that people value."

In the Ivory Coast, tipped to rank among Africa's largest cellular markets by the end of 2003, the three mobile firms have in three years won as many customers as the land line system.

"Public utilities in Africa - telecoms and electricity companies in particular - have traditionally been used as a cash source for governments and are, therefore, almost by definition inefficient," said John Githongo, director of the Nairobi-based African Strategic Research Institute.

"Mobile phone companies are usually private and well-managed, more efficient, with much less bureaucracy." Demand for mobiles is so high that in some countries the existing networks are struggling to cope.

Safaricom, Kenya's only mobile operator - in which Vodafone AirTouch hopes to buy a 40 percent stake - has around 9,000 subscribers but a backlog of 47,000 aspiring customers.

Eager to catch up with its East African neighbors, Kenya in November awarded French company Vivendi Telecom the contract to operate a second mobile network from March, with the company pledging to roll out nearly 600,000 lines within five years. Some fear the proliferation of private mobile operators competing for the most lucrative segments of the market could drive existing land line firms out of business, widening the gap between those who can afford a cell phone and those who can't.

Already, two of Africa's top 10 telephone firms by revenue are pure mobile operators that barely existed five years ago - South Africa's Vodacom, 31.5 percent-owned by Vodafone, and Mobile Telephone Networks, or MTN.

"There is a risk that the basic telephone infrastructure will end up being neglected, leading to a selective development of telecoms in Africa," said Sam Wangwe, director of the Tanzania-based Economic and Social Research Foundation.

But many say competition benefits all, forcing existing providers to cut tariffs and improve products. When Ghana licensed a second national operator, the established land line company halved prices and started services outside the capital.

Also, governments often make the provision of telephone services in remote areas a precondition for granting mobile licenses.

South Africa, one of the world's fastest-growing mobile phone markets since liberalization started in 1994, requires all bidders for its third cellular license to have a black empowerment partner and a rollout plan including digital communications for poor townships and rural areas.

The two existing cell phone companies, Vodacom and MTN, which have signed up more than 2.5 million customers between them, have had to install some 30,000 subsidized community telephones in under-privileged areas.

But despite steadily falling tariffs, owning a mobile phone remains a luxury that few in Africa can afford.

A handset costs $100 in Tanzania, where the average annual wage is less than $300 and, if you are lucky enough to get connected, Kenya's Safaricom charges around $270, though two years ago it was five times that.

For many in Africa, mobile phone ownership remains a powerful status symbol.

"People would ask friends to call them on the mobile while they are meeting someone so they can show they have one," said Githongo in Nairobi.

"Once, the symbol of success was owning a luxurious car - a Mercedes or a BMW. Now you can add mobile phones to the list - and nowhere is that symbol more powerful than in Africa, because here poverty is so grinding."