Voice is still important in Africa

Airtel Africa released its results for the quarter ended June 2022 and their performance is pretty impressive. EBITDA margin increased from 44% to 49% between 2020 and 2022. Revenues jumped from US$ 3.4 billion to US$ 4.7 billion. But one of the more interesting statistics is the trend for both voice and data. Data grew by 108% for the 2 years between June 2020 and June 2022 and voice grew by 44% for the same period. Strong data growth is the new normal but it’s the strong voice growth that is unexpected, especially when it’s predicted that voice revenues will decline precipitously. Voice revenues are still important in Africa. 

The growth of voice on 2G networks is going to change in the near future, though faster for some countries than for others. South Africa is planning to turn off its 2G and 3G networks by the end of 2023 in order to use that spectrum for 4G and 5G rollout. New 2G devices will also be banned by the end of 2023. If this happens in countries that Airtel operates in, then the total minutes on the network should fall off a cliff. But it’s not as though voice will no longer be important. Voice will migrate to 4G and 5G networks. Ericsson believes that voice on 5G will mean greater opportunities for telco’s because there are so many new products that 5G will enable, such as interactive calling where a voice call is supplemented with AR and VR applications.

Other news from around Africa

• OECD Tax Framework Pillar 1: The OECD will be holding public consultations on Pillar 1 of the OECD Tax Framework on the 12th of September. Pillar 1 refers to the allocation of taxation rights to a jurisdiction based on the revenues in that jurisdiction. A corporation must have at least €1 million of revenues or €250k in revenues in a country with a GDP of less than €40 billion.  
• Termination rates in Nigeria: The NCC has increased termination rates to USD0.10 per minute for international calls. This is also a fixed price and international operators can no longer negotiate better terms. The net result should be a rapid reduction in the use of international calls and an increase in OTT services.