The mobile telecommunications industry in Africa is in a transition phase, with changing industry structure and dynamics. Africa currently has over 800 million mobile connections and nearly 450 million unique subscribers. The coverage of mobile networks ranges from 10% to 99% across countries in Africa, with an average of 70% mobile coverage.
Despite the huge growth and potential future opportunity, the mobile industry in Africa faces many challenges – both infrastructural and operational.
- The mobile operators face challenges to power their existing networks, both off-grid and on-grid, because of unreliable power supply and heavy reliance on expensive diesel power to power up their existing networks.
- The mobile operators face infrastructure challenges to expand mobile coverage to uncovered population (majority of which live in rural and remote areas without access to grid electricity and road infrastructure) owing to higher operational costs and poor ROI.
Mobile networks in Africa have grown beyond the reach of grid electricity and mobile operators have deployed a significant part of their tower infrastructure in areas without any access to grid electricity infrastructure. According to GSMA analysis and estimates, Sub-Saharan Africa has a total of over 240,000 towers across countries, providing mobile coverage to 70% of the region’s population. The size of the tower portfolio is expected to grow to over 325,000 towers by 2020.
The majority of telecom tower sites in Africa are deployed in either off-grid areas or problematic grid areas with unreliable power supply. Africa currently has an estimated 145,000 off-grid sites, which is expected to grow to 189,000 sites by 2020. The number of unreliable-grid sites is expected to grow from 84,000 in 2014 to over 100,000 sites by 2020.
Energy costs constitute a major chunk of network OPEX for mobile operators in Africa. For a typical tower site in Africa, the share of energy costs is as high as 40% of the overall network OPEX. An off-grid site consumes nearly 13,000 liters of diesel every year, at an average annual energy OPEX of over US$21,000 and adds nearly 35 metric tons of CO2 emissions to the environment. An unreliable-grid site consumes around 6,700 liters of diesel and produces 18 metric tons of CO2 emissions to the environment. Further to the above costs of diesel power, there is an additional 10-15% cost due to diesel pilferage which is very common practice in many countries across Africa.
A 60-70% reduction in CO2 emissions by adopting green power alternatives for telecom towers would result in an annual OPEX savings of nearly US 17,000 per site. It would require an initial investment of US$ 42,000 per site with an ROI of over 35% and payback of less than 3 years. This presents a significant opportunity for mobile operators and investors to positively look into green power as a viable alternative to power mobile telecom networks.
Africa has a great renewable energy resources potential to be exploited, especially owing to its hydro, solar, wind and bioenergy resources across the continent. However, with its imminent challenges, the mobile industry in Africa is far from capitalizing on the tremendous potential offered by green power alternatives. Africa currently has only around 4,000 sites deployed with green power (solar, wind, fuel-cell etc.) and their hybrid combinations including diesel generator as a backup source with reduced run hours.
Limited investment capital, dearth of sustainable business models, lack of impetus from government and regulators, limited collaborative efforts within the industry have handicapped the scaling of green power alternatives in telecoms across Africa. The changing industry structure has also greatly impacted the pace of green adoption over the past few years.
A crucial driver of the conversion to greener alternatives will be Energy Service Companies (ESCOs) that provide energy to towers owned by Mobile Network Operators (MNOs) and dedicated Tower Companies (Tower Cos). Many MNOs across Africa are in the process of selling of their tower assets, including the energy infrastructure. This trend, brought on by a strong imperative to cut network deployment and operating costs, is expected to intensify in the future.
For in depth insights, please read the detailed report published here.