Africa is crying out for pre-owned smartphones

Boosting access to affordable, reliable smartphone handsets could help African telcos convert millions of users from 2G and 3G customers into data hungry 4G subscribers, says HYLA Mobile’s CEO, Biju Nair
MWC, MWC2020, Telecoms, Handsets, Africa

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With over 750 million mobile connections, Africa is a huge market for telcos to service. With some of the lowest average revenue per user (ARPU) statistics anywhere in the world, turning a profit can be a real challenge for mobile network operators in Africa.

Recent statistics show that only around 250 million people in Africa have access to a smartphone, meaning that around 66 per cent of mobile connections are made on non-smartphone handsets, with extremely limited functionality.

According to Biju Nair, CEO of HYLA Mobile, African consumers are showing strong demand for smartphone handsets but are being effectively priced out of the market.

“Africa is a uniquely interesting continent. When it comes to devices, we have seen smartphone adoption, not surprisingly, trail compared to more developed economies—but this is not because of a lack of innovation,” he said.  

“One trend I am seeing is that the number of repurposed devices being sold in the region continues to rise. There is a clear demand for smart devices, but at a reduced cost for this market with a subscriber base that is predominantly prepaid or pay-as-you-go. With so many subscribers still on feature phones or early generation smartphones, Africa is a region with huge potential for newer smartphones. There have been attempts to provide access to digital services for less money by the introduction of “smeature”, or smart feature phones. However, even with government subsidies, the manufacturing of new devices is simply too expensive to bring the cost low enough for the average consumer. The most profitable and eco-friendly way to provide consumers in Africa with smartphones is by bringing pre-owned devices to the region. 

Boosting the availability of smartphone handsets would enable telcos to move subscribers up to 4G contracts, which would afford them the opportunity to upsell customers a range of converged, data centric services.

Shifting customers onto 4G, and eventually 5G services, would also relieve operators from the operational expense of having to maintain such high availability levels for their older 2G and 3G network infrastructure.

“Maintaining 2G and 3G networks while deploying newer 4G and even 5G networks is an incredibly expensive process. If telcos are able to offer affordable 4G devices, operators can encourage customers to make the leap to these newer networks. Devices that may seem outdated to markets in the US and are a few years old, are actually attractive devices to own in Africa. Being able to provide refurbished, pre-owned devices that support 4G technology to consumers in Africa will be an incentive to get more people using newer technology and networks, allowing telcos to make cost savings by “turning off” their 2G and 3G networks,” Nair explained. 

Initially, this migration onto 4G would naturally centre on the continent’s densely populated urban areas and cities. Allowing operators the chance to scale down their antiquated 2G and 3G infrastructure could be a real money saver for them.

“Mobile connectivity is naturally concentrated in urban areas, as telcos get the greatest ROI by accessing the greatest number of subscribers. We see capital cities across Africa driving demand for connectivity, especially in more developed countries like South Africa. The whole African continent stands to benefit from enhanced connectivity and increasing productivity,” Nair added.

With so much of the population still being served by 2G and 3G mobile network infrastructure, it could seem a little trite to begin talking about 5G launches in Africa. However, many of the bigger telcos are keen to showcase their technical capabilities and Nair believes that enterprises in Africa’s business centres will soon begin to demand next generation connectivity as a matter of course.

“Africa is a technology driven continent and the latest innovations should always be considered—which makes the 5G conversation one worth having. Practically, it’s a much harder landscape to deploy 5G infrastructure in than other regions, especially when cost is factored in. Looking at the 5G roadmap for Africa, it appears countries like Egypt and Morocco and their neighbors are the ones that are moving a little further along than the other countries. Part of the reason is because of the strong presence of some of the European group operators out there, such as Vodafone, Orange— they are the ones driving early trials in those countries,” he said.

“With 4G networks covering nearly half of the population today, telcos in Africa should focus on upgrading subscribers onto these newer networks as soon as possible, as this is an essential and necessary step to get Africa to 5G,” he added.

2020 is set to be a busy year for mobile network operators in Africa, as they grapple to balance the competing demands of maintaining the availability of their older generation networks with expanding the reach of their new, 4G infrastructure. Nair expects to see a surge in demand for second had smartphone handsets, as consumers look to access a broader range of mobile services.

“For the industry as a whole, in 2020, we expect to see more 5G devices hit the shelves with more mainstream launches by market leaders like Apple and Samsung. While we are unsure how much the new 5G devices will cost, operators, retailers and OEMs should be encouraging consumers to upgrade sooner, rather than later.

“As consumers in North America begin to trade-in their devices for 5G smartphones, more pre-owned 4G devices will become available for those throughout Africa. Additionally, looking ahead two to three years, at the same time 5G networks are expected to become more prevalent in Africa, consumers in North America will be trading in their 2020 5G devices for the latest and greatest device, thus providing a future supply of pre-owned 5G devices,” he concluded.

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