MOBILE TRENDS AFRICADR. CHRISTOPH STORK

1ResearchICTSolutions

Africa Total Population 1.2 Billion

960 Million people covered by 2G

Signal in Africa

310 Million Internet Users

in Africa

POPULATION COVERAGE EXCEEDS INTERNET USERS 3 TO 1

2

Mobile Broadband Stats (Source GSMA)

Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017

31%25%

18%13%

10%7%

61%56%

52%47%

41%34%

58%56%54%50%

43%35%

3G Network population coverage% unique Mobile Internet subscribers% of smartphones among active connections

Research ICT Africa Tanzania 2017: Nationally representative household survey

Individuals 15+

owning a mobile phone

knowing what the

internet is

using the internet

using social media

Tanzania 57.0% 44.6% 29.8% 11.9%

Male 62.7% 51.3% 31.5% 14.3%

Female 52.0% 38.7% 27.8% 9.8%

Urban 72.6% 59.2% 55.4% 28.9%

Rural 50.5% 38.6% 13.6% 4.8%

Low Smartphone Penetration

Total Urban Rural Male Female

20%23%10%

40%21%

11%11%12%

9%

11%

70%66%78%

51%68%

Basic phone Feature phone Smartphone

Tanzania (2017): mobile users 15+ without smartphone Research ICT Africa

Tanzania (2017): Main reasons why not using Internet Research ICT Africa

Total Urban Rural Male Female

13%12%14%10%13%

14%17%14%18%15%

64%63%64%61%63%

No access device (computer/smartphone)No interest/not usefulI don't know how to use it

Nothing to use the Internet with

Tanzania (2017): mobile users 15+ without smartphone Research ICT Africa

Tanzania Urban Rural Male Female

12.7%6.0%9.3%9.4%

9.3%

61.1%59.8%62.7%54.7%60.4%

21.6%28.2%24.9%24.8%24.9%

I do not need one (a feature/basic phone is sufficient for me)I cannot afford one, it is too expensiveIt is too complicated for me/I do not know how to use one

Smartphone Cost Main Barrier

FREEMIUM INTERNET

Freemium Business

Model

FREEMIUM INTERNET: FREE SLOW INTERNET - 2G

9

2G 3G

4G

Percentage of Population Covered by Mobile Signal

20% 50% 90%

30%

Perc

enta

ge o

f Pop

ulat

ion

Usi

ng In

tern

et

90%

Affordability Gap

Free Basics Freemium Internet

What is free zero rated content Internet access

Content controlled by Facebook open

Speed any 2G speeds, eg up to 64 kbps

Initiated MNO MNO / Regulator

Defaults Facebook None

Comparing Free Basics to Freemium Internet

DATA + OTT

International traffic in billion minutes (Source: Telegeograpgy)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

550557562552522

478436

408387

353310

277

557

424

306

215

160115

86553321147

OTT traffic Carrier traffic

Towards top-up (bundles) and OTTLowest prices in country

US cents Q4 2016

Out of bundle prices 1 MB based on 1 GB top up1 MB 1 SMS 1 Minute

South Africa 1.04 1.80 4.29 0.58

Uganda 1.40 2.15 5.16 0.14

Tanzania 1.50 1.31 4.21 0.22

Ethiopia 2.11 2.11 4.05 1.00

Ghana 2.46 0.98 1.60 0.16

Cote d'Ivoire 3.29 4.12 7.88 0.29

Mozambique 2.65 2.31 6.50 0.13

Kenya 8.00 1.00 2.67 0.50

Namibia 6.47 2.52 2.73 0.17

VM

I

0

2

4

6

8

Monthly cost of top up in USD

0 45 90 135 180

Airtel Kenya Cell C South Africa MTC NamibiaMTN South Africa Orange Kenya TN Mobile NamibiaVodacom South Africa OTT User

Value for Money Index (VMI) Q4 2016 based on OTT user perspective

NEW BUSINESS MODEL

Retail pricing: In future only charging for dataRe

venu

e

0%

25%

50%

75%

100%

2000 2005 2010 2015 2020

Voice + SMS Data

Friends & family Dynamic

pricing

On-net calls Peak

On-net calls Off Peak

On-net calls Off Off

Peak

Off-net calls Peak

Off-net calls Off Peak

Off-net calls Off Off Peak

Fixed-line calls

Peak

Fixed-line calls Off Peak

Fixed-line calls Off Off Peak

SMS On-net

SMS Off-net

Data

MMS On-net

MMS Off-net

Recharge based

incentivesUsage based

incentivesZero-rated

services

Mobile content

Speed

Volume

Old Business Model New

1) Complex product design 2) High marketing cost 3) Complex billing system 4) Postpaid Expense risk: Tx / ISR

1) Simple product s 2) Low marketing cost 3) Simple billing system 4) Total risk = 1 month subs.

RESEARCH ICT SOLUTIONS

STEVE ESSELAAR PARTNER, RIS

MBA

DR. CHRISTOPH STORK PARTNER, RIS

PHD, ECONOMICS17 years ICT sector research experience

in Africa

Designed and managed household and business surveys on ICT access and use

across Africa

+27 84 999 000 2

christoph@researchictsolutions.com

15 years ICT sector experience

Senior Technology Consultant focused on strategy, policy and regulation.

Conducted multiple FGDs over the last decade.

+1 778 865 5695

steve@researchictsolutions.com