Sub-Saharan Africa will provide tremendous opportunities for DTH platforms over the coming years. These opportunities will be driven by: 1) very low TV household penetration rates currently, 2) economic development and population increases, and 3) the current hole in the market where a low-cost, low-margin, almost “India-esque” operator should be. For these reasons, Sub-Saharan Africa may be primed for a period of considerable growth in the DTH industry.

NSR’s most recent DTH study, Global Direct-to-Home (DTH) Markets, 6^th Edition, estimates Sub-Saharan Africa’s current regional TV penetration rate is just under 47%.  However, this does not tell the whole story; 35 of the 46 countries included in Sub-Saharan Africa have TV penetration rates of lower than 50%, with these countries’ combined population exceeding 500 million. Furthermore, there are over 71 million households in Sub-Saharan Africa without a television. As economic development and falling TV prices lead to an increase in TV penetration throughout the continent, the addressable market for DTH operators—namely, homes with TVs, will increase dramatically from a relatively low starting point. NSR predicts TV households in SSA will increase from 63M in 2012 to 108M by 2022, and continue to increase moving forward.

In addition to growth through existing households acquiring their first TV, Sub-Saharan Africa will also experience rapid population growth. Between now and 2022, Sub-Saharan Africa’s population is projected to increase by roughly 200 million people, to around 1.1 billion. Further, looking long-term, the region is expected to be home to 1.5 billion people, or an increase of 600 million from today, by 2035. This continued explosion in population is particularly noteworthy when considering other developing countries (Indonesia, Bangladesh, and to a lesser extent India, to name a few) are experiencing declining birth rates—and thus declining population growth.

However, no matter how many people or TV households come to be in Sub-Saharan Africa, there is still an absence of one crucial thing—consumers with the disposable income to support DTH platforms, and platforms that cater to those consumers’ needs. This is where there has been an inherent disconnect in recent years. For example, comparing Nigeria, SSA’s largest country with over 170 million people, to India, one notices that their per capita income is nearly equal, with Nigeria’s being 4% higher than India’s (~$1,650 compared to $1,600 per year, according to the IMF). However, the lowest-cost DTH package in Nigeria costs over $6.20US per month, whereas the lowest-cost packages in India cost less than $3. Therefore, average Nigerians are being asked to spend nearly 5% of their monthly income on DTH services, whereas in India the number is less than 2.5%. With several Indian operators recently turning a profit, and showing that the “high-volume, low-ARPU” business model can be a viable one, there is every reason to believe this can be achieved in Sub-Saharan Africa.

In summation, all the ingredients are present in Sub-Saharan Africa for a DTH boom—currently low TV penetration rates that are increasing rapidly, a large and fast-growing population, and a general trend of foreign investment and economic development. To cater to this rapidly emerging market, a truly low-cost operator is needed, along the lines of those currently present in India.

Bottom Line

While Sub-Saharan Africa remains largely undeveloped, there is a perfect storm brewing that will spell immense opportunities for DTH platforms, provided they attack the correct market segments. While the upper and middle classes are already relatively well-served by operators, the continent lacks a serious offering for the lower-class, which will make up the bulk of population and addressable market growth moving forward.