Irish firms are seeking a slice of the continent's rapidly growing mobile market, writes BILL CORCORANin Cape Town

IRISH TELECOMMUNICATIONS companies have joined the race to secure a slice of Africa’s burgeoning mobile phone market, which is one of the fastest-developing in the world and has huge potential for further growth.

Historically, the lack of regional infrastructure, a poor regulatory environment and inadequate private-sector involvement caused the development of fixed-line services in the majority of African countries to stagnate.

However, the arrival of affordable wireless technologies in the 1990s, along with the decision by many African governments to respond to the regulatory needs of the marketplace, has prompted massive investment in the mobile phone sector by network operators and service providers.

In countries such as South Africa, industry experts say mobile phones now outnumber fixed lines by eight to one. But across the continent, market penetration outside the main urban areas has remained low.

This looks set to change in the years ahead as technological advances – from improvements in wireless base stations to the software that runs the system – make it more economically viable to bring mobile phones to remote areas.

Only last month Indian mobile phone giant Bharti Airtel offered to buy the African assets of Kuwaiti telecommunications firm Zain for $10.7 billion (€7.8 billion), with a view to growing its revenues abroad because its domestic market is heading towards saturation.

Zain operates in 15 African countries including Nigeria and Chad. According to the company, mobile phone penetration in 12 of these countries is still less than 50 per cent.

Kerry-based Altobridge, whose core business is centred on the provision of affordable remote wireless communications technology, is another telecommunications company intent on expanding its business into Africa.

According to Altobridge chief executive Mike Fitzgerald, the company is on the verge of securing a partnership with one of the continent’s main mobile operators, and he hopes a deal will be struck within months.

“We took our remote communications solution and the associated business model from Asia [where the firm already operates] and presented it to several of the main mobile operators in Africa and it has taken us about two years to finally make a breakthrough,” he says.

“We were careful not to just focus on a specific country, as in one national operator, the reason being that, as a small player, it makes more sense economically to put the hard work (selling and proving your technology) into one of the big African telecommunications players. If you make a breakthrough with one of them, then multiple countries open up on the back of it.”

To demonstrate the capabilities of its technology, Altobridge took it to a remote part of one of west Africa’s more troubled countries late last year and set up a wireless base station as part of a trial with its potential partner.

“The trial is complete and it was successful. In fact, the group chief executive [of the African partner] flew there to make a call himself. We are presently negotiating a frame agreement with them with the potential to penetrate many of their 17 operations across Africa.”

He adds, however, that the name of the telecommunications operator remains confidential until the deal is announced.

The arrival of wireless technology in Africa has prompted people to use mobile phones to improve their everyday lives in ways that have not taken off in western countries, even though the majority of phones used are still basic handsets.

The general public and small businesses use mobile phones to pay bills, buy basic items and store money after making a sale, a system that is useful as it means there is no cash to be stolen by thieves.

In addition, because the vast majority of Africans do not have access to banking institutions due to their scarcity outside urban areas, they have turned their handsets into mobile bank accounts.

Millions of relatives living abroad send money home to their families each month, as a newly developed mobile phone banking system is now one of the fastest and safest methods to do so.

All you do is go to an approved agent with your ID and phone, register your number and receive your passwords, and then deposit cash in to your newly opened account.

Safaricom, which launched Kenya’s biggest mobile phone banking service, M-Pesa, in conjunction with Vodafone in 2007, now has more than 6.1 million users.

Although the amounts of money transferred are often small, the sheer volume of transactions makes it a profitable venture. The system has proved so successful that it is being replicated across the continent.

Providing modern-day solutions to age-old daily difficulties for people living in remote parts of Africa is where the opportunities lie, says Fitzgerald.

“We go into these areas to entrepreneurial people like miners and farmers and we focus on providing them with solutions to their communications problems. It’s about optimising what’s available.For instance, we rely on generators to power our mobile phone base stations, but we are trying to go the solar-power route.”

Another Irish company keen to take advantage of the developing mobile market in Africa is Dublin-based NewBay, which focuses on providing digital multimedia messaging solutions for operators and their subscribers.

NewBay owner Paddy Houlihan says the level of interest from South African telecommunications companies seeking to establish partnerships has increased significantly in the past few years, but the company is still in the learning phase regarding the market.

“Typical of African countries, there is little fixed-line broadband like there is in Ireland, so really the first computer many Africans have is there mobile phone,” he says. “The question is: do we want to try to adapt our technology for this emerging market?”

He adds: “For businesses like us, penetration is still very low because handsets are not yet sophisticated, but the markets tend to catch up very quickly . . .

“Everyone wants to do something in South Africa for the World Cup, and hopefully we will do something soon.”