The Impact of the Financial Crisis: Developments in the Mobile Telecommunications Industry in Africa

Abstract

The purpose of this article is to examine the impact of the financial crisis on the mobile telecommunications industry in Africa. The study focuses on five transnational telecom- munications operators - Millicom, MTN, Orascom, Vodacom and Zain (now Bharti Airtel). In order to achieve its objective, a time series analysis was carried out on key balance sheet and investment indicators of these five operators before the onset of the financial crisis in the years 2006 and 2007 and during the financial crisis in the years 2008 and 2009 in order establish a trend. The results show a clear trend of slowing telecommunications growth, revenue, EBITDA and ARPU in the years 2008 and 2009, a consequence of the financial crisis. Although affected, the effect was moderate, demonstrating the residence of the industry. For an industry of such importance, African governments must further expand the service until every citizen has access and encourage companies to integrate telecommunications service in their operations in order to improve efficiency.