The telecommunications (telco) industry has become an indispensable driver of economic growth worldwide. Mobile phones have transcended their traditional role as communication devices and developed into powerful tools that drive social and economic progress. From facilitating remote education and healthcare to empowering small businesses and boosting agricultural productivity, the impact of mobile technology is far-reaching—and expanding—especially in Africa.
While African operators face headwinds, including regulatory complexities and infrastructure gaps, the opportunities in the industry far outweigh the obstacles. The continent’s growing population, expanding digital landscape, rising demand for mobile services, and emerging appetite for new technologies allow the telco sector to leapfrog outdated infrastructure and create new value for businesses and consumers alike. But in a classic case of “What got you here won’t get you there,” telco strategies of today may not be sufficient to win the future.
To reach the next 500 million users on the continent and unlock an estimated $170 billion in GDP in 2030, African telcos will likely need to make new strategic choices. This article offers a map of the terrain, exploring the macroeconomic trends and global benchmarks shaping today’s industry, identifying the opportunities and white spaces, and pinpointing what it could take to secure the future.
Macroeconomic indicators point to strong growth potential for African telcos
The trends shaping mobile, wireless, and broadband across the continent suggest a strong long-term growth trajectory for the African telco sector, with population growth and demographics among the most significant drivers of potential growth.
Africa has the youngest and fastest-growing population in the world, with the youth segment (aged 15 to 34) projected to reach approximately 602 million by 2030. This digitally savvy demographic is fueling the adoption of mobile and internet services, creating a vast and expanding market for telco operators as more and more people come to rely on mobile devices for communication, financial transactions, and entertainment. Mobile subscriber penetration in Africa is expected to reach 50 percent by 2030, with 751 million unique mobile subscribers, up from 44 percent (527 million subscribers) in 2023.
Rising data consumption and the demand for data-heavy services like video streaming and online gaming are also pushing telco operators to invest in network expansion and upgrades. However, while mobile broadband and internet penetration are improving, a significant usage gap remains. As of the end of 2023, mobile internet penetration in sub-Saharan Africa (SSA) stood at just 27 percent, compared with a global average of 69 percent (Exhibit 1). Affordability also remains a key challenge. While the cost of smartphones and mobile data is decreasing, entry-level devices still cost almost as much as the average monthly income of the poorest 20 percent in SSA, limiting access for lower-income populations.
Other factors fueling the growth of African telco include the continued rise of fintech and mobile money, the uptake of new technologies such as 5G fixed wireless access (FWA), and investment in fiber-optic technology to drive fixed broadband penetration.
With approximately 835 million registered mobile money accounts in SSA in 2023, telco operators are leveraging their infrastructure to offer financial services, increasing financial inclusion and creating new revenue streams. This growth is also fueling e-commerce growth, enabling digital payments for goods and services, and further embedding telecom networks into daily economic activity.
Furthermore, 5G FWA adoption is on the rise across the continent, with operators already offering services in key markets, including Angola, Kenya, Nigeria, South Africa, Zambia, and Zimbabwe. The number of 5G FWA subscriptions is expected to surge from fewer than 500,000 in 2022 to nearly four million by 2028. Investment in 5G is accelerating, supported by spectrum releases and network modernization. Over a dozen African countries have launched 5G services, notably in eastern and southern Africa, and operators are prioritizing 5G FWA as a cost-effective alternative to fiber, particularly in regions where fiber infrastructure is limited.
While fixed broadband penetration in Africa remains low, it is growing at an annual rate of 11 percent, outpacing the global average of 7 percent, and is expected to reach 20 percent by 2030. Governments—often in partnership with international financial institutions and global vendors—have established ambitious plans for the deployment of fiber and have set up strong incentives and regulatory frameworks to support it, notably in Algeria, Côte d’Ivoire, Egypt, and Morocco. For example, initiatives like Kenya’s National Optical Fiber Backbone (NOFBI) and Côte d’Ivoire’s fiber expansion aim to improve nationwide connectivity.
Fiber-optic technology is a major driver of broadband expansion in Africa, with fiber subscriptions expected to grow by 245 percent between 2022 and 2028. While high-end areas were the initial focus of deployments, smaller internet service providers (ISPs) are now expanding services to densely populated, lower-income neighborhoods. Operators are rapidly deploying fiber-to-the-home (FTTH) and fiber-to-the-cabinet (FTTC) solutions to enhance urban and rural connectivity, while countries like Egypt, Nigeria, and South Africa are upgrading to 10G passive optical network (PON) technology for better network reliability and increased speeds. Meanwhile, global tech companies such as 2Africa and Equiano are investing in undersea cables to boost internet speed and affordability.
African telcos operate in fragmented markets with relatively high costs and low investment
While Africa’s telco sector continues to expand its subscriber base and data usage, it faces significant challenges that have an impact on profitability, investment returns, and long-term sustainability. Our analysis of available data finds that globally, the telco sector has faced financial difficulties and has underperformed relative to other sectors, achieving a lower total shareholder return (TSR) over the past nine years relative to the MSCI Index, which includes telcos.
Like their global counterparts, African telcos have experienced a decline in shareholder value since 2019, although some companies, including Telecom Egypt, Sonatel, and MTN, have bucked the trend, increasing shareholder returns by 87 percent, 70 percent, and 14 percent, respectively (Exhibit 2).
The top eight African telcos by revenue have seen strong growth in the number of mobile subscribers, but their average revenue per user has declined since 2020 as a result of inflation, low income levels, and increasing competition (Exhibit 3). Despite this, total revenue continues to grow because of rising mobile data consumption, the expansion of 4G and 5G networks, and greater adoption of mobile money and fintech services. For instance, MTN reported a 14 percent increase in service revenue in 2022, largely driven by data and fintech. However, high operating costs, including energy expenses, sector-specific taxation, and currency devaluation, offset this growth, putting pressure on margins. Additionally, while global telcos expect investment levels to remain strong, African operators are more cautious about future capital expenditure.
Infrastructure remains a challenge for African telcos, with profitability limited by high costs and low levels of infrastructure sharing. Unlike their global counterparts that have embraced cost-sharing agreements to improve efficiency and reduce costs, African telcos operate in fragmented markets with high costs and fewer opportunities to consolidate infrastructure. Further financial risks result from regulatory complexities, including high taxation and spectrum licensing fees, as well as fluctuating foreign exchange rates.
Despite challenges, African telcos have significant opportunities to thrive and grow
African telcos are skillfully navigating these macroeconomic pressures, regulatory hurdles, operational pressures, and gaps in affordability and usage. However, many operators, even those with a substantial market share, struggle to cover their capital costs. Nevertheless, telcos have opportunities to achieve financial growth and profitability while boosting digital inclusion across the continent. There are white spaces in infrastructure expansion, digital-economy growth, advanced technologies, business-focused services, affordability and inclusion, and infrastructure sharing.
Expanding mobile connectivity and infrastructure
One of the biggest opportunities for telcos in Africa is the expansion of mobile broadband coverage, particularly in rural and underserved areas. Innovative models such as network as a service (NaaS) and non-terrestrial networks (NTNs), including LEO satellites, can help close coverage gaps. Additionally, with 4G adoption expected to reach 50 percent by 2030, telcos have a significant opportunity to upgrade networks and increase smartphone adoption. In rural and underserved areas, FWA, particularly 5G FWA, is emerging as a cost-effective alternative to fiber. It offers fiber-like speeds without the high cost and logistical challenges of deploying terrestrial networks in remote regions. Furthermore, spectrum refarming and strategic midband spectrum allocations can enhance 5G capabilities, delivering faster, more reliable mobile broadband services.
Capitalizing on the digital economy
The rapid increase in mobile data usage presents a strong growth avenue for telcos. With mobile data traffic per connection expected to quadruple in SSA by 2030, telcos can expand their offerings to support high-bandwidth applications such as video streaming, cloud gaming, and remote work solutions.
Another major driver is mobile money, where Africa leads globally. With almost half of the world’s total mobile money subscribers in SSA, African telcos have a significant opportunity to expand fintech solutions, including cross-border payments, microloans, and savings products. Additionally, e-commerce is growing, and telcos can play a crucial role by enabling secure digital payments and merchant solutions.
Leveraging new technologies
Advanced technologies such as AI, the Internet of Things (IoT), gen AI, and 5G offer African telcos opportunities to enhance efficiency and develop new services. AI-driven customer support, network optimization, and fraud detection can improve operational performance. AI is expected to contribute up to $1.5 trillion to Africa’s economy by 2030. IoT presents another growth avenue, particularly in smart city projects, connected agriculture, and industrial automation.
Beyond connectivity, emerging technologies offer new growth avenues in key sectors such as agriculture, energy, and healthcare. Smart farming solutions, AI-powered energy management systems, and remote healthcare services can enable economic development and enhance productivity. Meanwhile, investments in submarine cables and open transport networks (OTNs) could increase international bandwidth capacity and lower costs.
Serving the B2B market
There is a growing demand for enterprise-focused telecom solutions across agriculture, healthcare, logistics, and manufacturing. Telcos can offer private networks for businesses requiring dedicated connectivity, especially in remote industrial areas. Additionally, network APIs allow telcos to collaborate with developers to create innovative business applications, expanding their role beyond connectivity providers. A key challenge for telcos could be finding novel ways to provide these services to the more than 40 million micro businesses that may only have mobile phones, devices, and top-ups.
Addressing affordability and digital inclusion
Despite increasing mobile coverage, Africa faces a 60 percent usage gap, with many people (and micro businesses) not using mobile internet, even when there is network availability. To encourage adoption, telcos can invest in digital-literacy programs, localized content, and online safety initiatives. Because smartphone affordability remains a barrier, operators can also consider supporting uptake through device financing, installment payment plans, and sourcing of low-cost smartphones.
Sharing infrastructure
By sharing towers, fiber networks, and energy resources, operators can reduce deployment costs and accelerate coverage expansion. Governments and telco players can also benefit from public–private partnerships (PPPs), which could, in turn, attract investment and streamline infrastructure rollout. Additionally, introducing wholesale open-access networks (WOANs) could foster competition and drive down broadband costs, making connectivity more accessible.
Four key plays could help African telcos win
Africa’s telco landscape is rich with opportunity, but to thrive, telcos may need to update their playbook. Mobile technologies and services have been and can continue to be a cornerstone of economic development in Africa. They are also a gateway to transformative digital services, from e-commerce to AI-driven innovations. However, unlocking transformative growth is likely to hinge on decisive, forward-looking choices that break from legacy models. In looking to the future, telcos should consider four key plays.
Strengthen your foundations: Think like an investor
Our analysis suggests that a structured cost program could unlock a three- to four-percentage-point gain in EBITDA for telcos. Companies can start by evaluating their business as an investor would, by understanding the forces that have caused gaps in performance and then triangulating that analysis with external benchmarks and better-performing peers.
Telcos might then identify the organization’s most relevant value levers and set a high ambition for end-to-end efficiency across the business. One approach to setting the ambition is to create a base case scenario (the best the business can achieve if management doesn’t take extraordinary actions) and a realistically achievable potential scenario that represents the shareholders’ ambition level. Then the company would establish management targets and incentives that reinforce attainment of the more ambitious scenario.
Make a bet on an at-scale digital business
With the expected population growth and shifts in consumer behavior reflecting greater digital savvy, telcos have more room to expand beyond the core. Leading telcos are achieving 15 to 20 percent of revenues from digital businesses through adjacencies and are outperforming the rest of the market as a result. For example, one global operator generates 21 percent of revenues from products and services beyond connectivity and has achieved 50 percent greater total shareholder returns than those of its closest peers over the past decade.
Adjacent opportunities could include digital content, gaming, and digital advertising. Can telcos develop content-streaming platforms that leverage operator apps to drive usage and subscriber numbers? Wealth and financial services offer additional opportunities for expansion. Fintech partnerships have already been successful on the continent, and telco operators could use their rich data on customer behaviors to provide microloans, for example. Profitable business cases can be made for the B2C marketplace and B2B services.
Winning the home
FTTH is typically the end game for fixed technologies. Telcos could look to win in this space by bundling the three technologies for home broadband—fiber, wireless, and mobile broadband. For example, many telcos could prioritize FTTH in profitable areas and leverage wireless tech. FWA could then be used in 4G in areas with sufficient capacity on the current network and in 5G where the cost to deploy is too high or when deployment capacity is insufficient. Such an approach could reduce overall deployment costs by maximizing the use of existing infrastructure.
Another vertical to consider is home security. Telcos could quickly partner to provide services along the full home security value chain, from equipment manufacturing to distribution, installation, and maintenance. The services could range from reliable, easy-to-install security system kits to advanced, comprehensive offerings for customers with sophisticated needs.
Building a gen-AI-native ‘techco’
It is no longer a question whether telcos should put AI and gen AI at the center of their business. The technology, such as specialized API-driven services for machine learning and deep learning, is readily accessible, and there has been an explosion of usable data to support AI use cases. Most operators today can collect, structure, and use significantly more data directly. Additionally, use cases and outcomes are proven; players across industries have already deployed critical AI use cases that are relevant for telcos. Gen AI is now in the mainstream.
To leverage AI and gen AI, operators can adopt one of three lenses. First, adopting AI for the core can make operations more efficient and enhance customer and employee experience. Second, in offering AI as a service, companies create and monetize new solutions to solve internal challenges and make these solutions widely available. And offering AI as a consumer solution would involve developing new solutions to solve consumer needs.
Despite headwinds, African tech and telco leaders are upbeat about what’s next. However, they cannot afford to be complacent. The choices that drove past success may not bring success tomorrow. Rather than looking backward, CEOs and other C-level executives should imagine themselves five years in the future, looking at today’s decisions and asking, “What choices did we make? What bets did we miss?”
Many of the big opportunities for market-shaping growth are already in play. To win, Africa’s telco leaders will need to make the big, bold bets that will matter. If they can do this today, the sector’s best years may still lie ahead.
“Our firm is designed to operate as one—a single global partnership united by a strong set of values. We are equally committed to both sides of our mission: attracting and developing a talented and diverse group of colleagues and helping our clients create meaningful and lasting change.
From the C-suite to the front line, we partner with clients to help them innovate more sustainably, achieve lasting gains in performance, and build workforces that will thrive for this generation and the next.”
Please visit the firm link to site