Mergers and acquisitions, infrastructure sharing, and market liberalisation will "reshape" telecommunications across Africa over the next four years, according to Frost & Sullivan.

In a new communications market forecast for the period to 2018, Frost & Sullivan said the communications market across Africa can be categorised as "highly competitive", but this is set to heighten over the coming years.

According to the report, as African governments increasingly realise the correlation between prevalence of ICT and economic growth, there will be a push to liberalise markets, support new market entrants as well as mergers and acquisitions, and promote infrastructure sharing.

"Communication markets will become more liberal, especially in countries where governments understand the correlation between Information and Communications Technologies (ICT) development and economic growth," said Naila Govan-Vassen, ICT industry analyst at Frost & Sullivan.

"This will drive infrastructure sharing agreements, which are expected to take place as a measure to bring down investment costs and increase reach away from urban areas. With this, new market entrants will emerge in Africa, which will either tap into unexplored markets (for example, the case of Movitel in Mozambique) or strategically acquire a company," Govan-Vassen said.

As new international submarine cables are developed, the market analysis firm predicts investment will turn to backhaul and last mile infrastructure, as countries look to turn away from satellite connectivity. Apparently countries such as Rwanda, Uganda and Botswana are leading examples of this trend already occurring.

The mobile force

According to Frost & Sullivan, developments such as increased mobile banking and payments will drive inter-sector integration and as a result grow the demand for quality broadband; while e-commerce is a space offering vast opportunities with the potential to grow to over US$50 billion by 2018, the report says.

"Mobile banking and payments are growing in the continent, and with this new business models integrating communications with other sectors are developing - eEducation, eHealth, eAgriculture and eGovernance initiatives, for example. The ICT convergence with verticals will drive demand for fast, reliable and affordable broadband," Govan-Vassen said.

"Mobile Network Operators (MNOs) are expected to expand services beyond the traditional core business by strategically entering the digital space such as e-commerce. The African continent also presents huge opportunities for e-commerce," she said.

Change will also be rife in the telephony space, Frost & Sullivan concludes, as state ownership of the fixed line markets pushes consumers towards mobile, and as a trend towards consolidation emerges within the mobile space over the coming years.

"The fixed line market is controlled by the state owned companies (SoC), which are known to have limited funds for infrastructure development and investments. Lack of competition within the fixed line market has resulted in little motivation to improve services, and customers therefore choose to communicate through mobile devices rather than fixed line modes," said Govan-Vassen, adding that Tanzania, Ghana and South Africa are exceptions with two fixed line operators in each country.

In the mobile sector, the analysts say consolidation is increasing as a way for operators to increase their market share, infrastructure access, service offering and customer base, with this trend to grow to 2018.

Recent examples of this trend include the 2010 deal under which Vodafone Ghana acquired 70 per cent of Ghana Telecom's shares with the government retaining the outstanding 30 per cent; the 2013 acquisition by Airtel Uganda of Warid Telecom, making Airtel Uganda the second largest operator after MTN Uganda; and the myriad of mergers and acquisitions waiting to take place in South Africa, such as Vodacom and Neotel, and Telkom and BCX.

"Frost & Sullivan concludes that with fixed and mobile operators strategically tapping into one another's market space, the African telecommunications market will become a highly competitive space. Market consolidation will act as a key driver for the MNO to ensure a sustainable growth in the long run," Govan-Vassen said.