Different stages of the growth curve: Africa vs. Europe

Airtel Africa released its financial results this week: Revenues increased by 21.3% from US$ 3.8 to US$ 4.7 billion. EBITDA margin increased from 46% to 49%. The Vodafone Group also reported its financial results: group revenue grew by 4% from €43.81 to €45.6 billion. Airtel Africa subscriber numbers grew by 8.7%. In Europe, Vodafone’s mobile customers grew by 1.5%. These two examples illustrate a simple point: mobile operators in Europe and Africa are at different stages of the growth curve. African operators do not need to be as focused on cost control compared to European operators because their subscriber base is still growing quickly. A recent report by the European Telecommunications Operators’ Association (ETNO) makes the claim that European operators are subject to unfair competition from OTTs and that operators can no longer make a viable return on their investments. But how much of the slower revenue growth and gradually declining profit margins are just because European operators are at different stages of the growth curve? And how much of the decline in revenues is because customers moved to fixed networks and away from mobile networks during the pandemic? As pandemic restrictions have lessened, quarterly results from some European operators, like Deutsche Telekom, show strong revenue growth from their mobile segments. That these questions are not easily answered means that claims of a single source – such as the role of OTTs – for lower revenue growth for European telco’s are unlikely. More research is needed and overwrought claims by associations like ETNO highlight that more sophisticated analysis is required.

Other news from around Africa
  • Ghana: Vodafone is exiting the Ghanian market and selling its 70% stake in Vodafone Ghana to Telecel. 
  • MTN’s purchase of Telkom: The South African government will have a major say in the sale of Telkom to MTN. The government is the largest shareholder in MTN (23%) and Telkom (15%) and the current President of South Africa, Cyril Ramaphosa is the former chairman of MTN. 
  • Nigeria: Orange is investigating mechanisms to enter the Nigerian market and has visited the Nigerian Communications Commission to see what opportunities there might be.