KEY POINTS

• MTN Group CEO Ralph Mupita says an 80 per cent increase in memory chip prices is pushing up smartphone costs.
• Smartphone shipments to Africa have declined by 27 per cent, according to Mupita.
• Entry-level internet-enabled phones that could cost $30 to $50 are now projected to cost between $80 and $100.
• MTN Nigeria has more than 90 million subscribers, but only about two-thirds are actively using internet and data services, according to the company’s chief.
• Mupita called for lower device-related taxes, instalment payment plans and collaboration among governments, telecom operators and manufacturers to improve affordability.

MAIN STORY

Rising smartphone prices could slow efforts to expand internet access across Africa, MTN Group President and Chief Executive Officer Ralph Mupita has warned, as an 80 per cent increase in memory chip prices pushes up the cost of internet-enabled devices.

Mupita spoke on Wednesday in Lagos during an engagement with fellows of the Media Innovation Programme (MIP) of MTN Nigeria, where he outlined challenges facing the telecommunications industry and the wider digital economy.

According to him, smartphone shipments to Africa have declined by 27 per cent as growing demand for memory chips from companies building artificial intelligence infrastructure intensifies competition for the components used in mobile devices.

The development threatens to make internet access more expensive for people who depend on affordable phones to connect to online services.

“The really big difficulty today is the cost of devices,” Mupita said, explaining that the challenge extends beyond network coverage and data prices.

The industry had hoped that entry-level internet-enabled smartphones would become available for between $30 and $50, making them affordable to more people. However, Mupita said rising memory chip costs had pushed the projected minimum price to between $80 and $100.

“Memory prices have gone up by 80 per cent, impacting the cost of data-capable devices,” he said.

Memory chips are essential components of smartphones and other electronic devices. Their rising cost, driven in part by competition from developers of AI data centres and related infrastructure, is creating additional pressure on phone manufacturers and consumers.

Mupita said the situation presented a major challenge for Africa, where many people still struggle to afford the devices needed to access digital services.

He cited Nigeria as an example, noting that MTN had more than 90 million subscribers in the country, but a substantial proportion of its customer base was yet to benefit fully from internet connectivity.

“Only two-thirds of our customers are still using the internet and data very actively,” he said.

The MTN chief said governments could help reduce the cost of smartphones by reviewing import duties and other taxes that raise their prices. He noted that some African countries were considering measures to improve device affordability because wider access to smartphones could support productivity and economic growth.

MTN is also working with financial institutions to make devices more accessible through instalment payment arrangements.

“We are enabling customers to buy devices, working with bank partners to bring financing plans to devices,” Mupita said.

Under such arrangements, customers can spread payments over time rather than pay the full cost upfront.

He added that telecommunications operators could work together to aggregate demand and encourage manufacturers to supply devices at more affordable prices.

Mupita stressed that improving access would require cooperation among governments, network operators, financial institutions and device manufacturers to ensure that investment in digital infrastructure translates into wider participation in the digital economy.

THE ISSUES

The rising cost of smartphones creates a barrier between having mobile network coverage and actually being able to use the internet. A telecommunications company may extend its network to a community, but people without affordable internet-enabled phones cannot fully benefit from that investment.

The projected increase in entry-level smartphone prices is particularly important for lower-income households, students, small businesses and informal traders who rely on affordable devices to access information, communicate with customers and use digital services.

The pressure also affects Nigeria’s digital economy. If smartphones become less affordable, some people may delay upgrading their devices or remain unable to move from basic mobile services to more extensive internet use. That could limit the reach of digital education, online business and emerging AI applications.

The proposed response involves several parties. Reviewing import duties and other taxes could reduce some of the costs imposed on devices, although the actual effect would depend on the scale of those charges and how much of any reduction manufacturers and retailers pass on to buyers.

Instalment financing could help customers who cannot afford an upfront payment. However, spreading payments does not necessarily make a device cheaper overall, and affordability would depend on repayment terms and the cost of financing.

Telecommunications operators could also use their purchasing power to negotiate lower prices with manufacturers. The effectiveness of that approach would depend on the volume of devices ordered and the willingness of suppliers to offer lower prices.

WHAT’S BEING SAID

“Memory prices have gone up by 80 per cent, impacting the cost of data-capable devices,” – Ralph Mupita, President and Chief Executive Officer of MTN Group.

“The really big difficulty today is the cost of devices,” – Ralph Mupita, President and Chief Executive Officer of MTN Group.

“Only two-thirds of our customers are still using the internet and data very actively,” – Ralph Mupita, President and Chief Executive Officer of MTN Group.

“We are enabling customers to buy devices, working with bank partners to bring financing plans to devices,” – Ralph Mupita, President and Chief Executive Officer of MTN Group.

WHAT’S NEXT

The key questions are whether governments will adjust taxes that contribute to device costs, whether manufacturers can offer more affordable smartphones and whether financing arrangements will enable more people to buy internet-enabled phones.

MTN’s proposed partnerships with financial institutions and efforts to aggregate demand could help address affordability. However, the source material does not specify how many customers the financing plans are expected to reach or how much they could reduce the cost of devices.

The impact of rising memory prices on smartphone availability and prices will also be important to monitor as demand from AI infrastructure developers continues to compete for the same components used in consumer electronics.

BOTTOM LINE

Expanding network coverage alone will not guarantee wider internet access if people cannot afford the devices needed to use it. For Nigeria and other African markets, making smartphones affordable is becoming an important part of digital inclusion, with tax policy, financing and cooperation with manufacturers all potentially contributing to the solution.

Source: NAN