Monetization of 4G highly problematic, says report

The monetization of African 4G has been described as a commercial success in user terms, but an economic failure has its deployment and adoption had not either directly or indirectly change internet experience in Nigeria.

In a market research conducted by Xalam Analytics, it said the monetisation of African 4G is highly problematic, adding that many telecoms subscribers who had switched to 4G are still struggling to access the expected height of internet speed.

4G adoption statistics in Nigeria showed that Airtel began the deployment of 4G networks in February and reported coverage in over 60 cities as Globacom says it has extended its 4G LTE network coverage to all the 36 states, the Federal Capital Territory, including 208 tertiary institutions.

Also, 9mobile claims it has coverage in Lagos, Abuja, Port Harcourt, Kaduna and Kano while MTN is reportedly in all the 36 states and FCT.

“We found no solid correlation between strong 4G adoption and increased mobile operator profitability. Far from helping turnaround African mobile operators’ cash flow problems, 4G is making them worse over the medium term,” it added.

Though analysts at Xalam Analytics stressed that 4G deployment was necessary for MNOs as its adoption formed the baseline foundation for cloud services, data centre, video streaming, and e-commerce, they see Nigerian experiences since their switch from 3G to 4G as embarrassing.

Another revelation by the report showed that MNOs have started deepening investments in 3G rather than 4G as mobile operators have added 20 per cent more 3G base stations than 4G over the past 18 months.

The report averred that “4G in essence impacts everything. It is a barometer for how fast, and how ready the African market will be in entering the much-ballyhooed fourth industrial revolution. 4G adoption is the baseline foundation for cloud services, data centre, video streaming, and even e-commerce projections. African fintech is arguably the only sub-segment impervious to how fast 4G grows, as it is not as bandwidth-dependent.”

Xalam highlighted the impacts of slow adoption of 4G on the continent as, “SMEs sidestepping cloud services because of unavailable, or too expensive high-speed data services. Data centre markets operating at 10 per cent of their potential. Video streaming services not picking up as fast as expected, for largely similar reasons. Tighter e-commerce models due to a smaller than expected addressable base.”