Mobile broadband in the Middle East and Africa will expand to $6 billion in the next two years from the current $1 billion, spurred by an expanding network and falling prices, a telecoms advisory firm has said.
In Africa, there are 10 undersea cables either under construction or in the planning stages, which could push down international bandwidth rates, Delta Partners said in a report released on Tuesday.
Mauritius-registered private equity SEACOM on Thursday will commercially launch its cable in South Africa.
Fixed-line operators are already seeing a lot of their customers moving to mobile networks due to lower prices and Delta Partners said this would help propel mobile broadband to explosive growth.
The advisory firm predicted the number of mobile broadband users in the two regions would rise to 40 million by 2011, from the current 2.5 million.
“The Middle East has potential for 17 million mobile broadband subscribers and Africa has around 24 million users,” Delta Partners said, adding this would represent a market worth $6 billion by 2011.
Delta said the growth in mobile broadband would also depend on the reduction in mobile broadband prices, which would be driven by competition and decreases in connection costs.
“Improved international connectivity, which comes as a result of the various submarine cables being laid on both the East and West coasts of Africa, will enhance bandwidth and lower prices over time,” said Daniel Torras, a principal at Delta.
Currently, 1 gigabyte of international connectivity in Africa is between $15 and $30 depending on the country, Delta Partners said.
High broadband prices present opportunities for big mobile operators, such as MTN, Zain, Vodacom, Orascom and Orange, to enter the market at more competitive prices, the consultants said.
“MTN currently leads this potential due to its presence in the high-potential markets of Iran, Nigeria and South Africa,” said Delta Partners.
However, Delta Partners warned that mobile broadband required significant investment and could open doors for competing technology voice over Internet protocol (VoIP) from such companies as Skype.
“In response to the VoIP threat, mobile players are seen creating service offerings such as video over IP solutions to try to combat the Skype migration,” Delta Partners said.