By Nikos Moraitakis

The recent growth of African telecommunications companies has been nothing short of spectacular with revenues rising by 140 percent for MTN and 110 percent for Zain over the past three years.

In a continent with mobile penetration around the 50 percent-mark, one could easily be fooled into assuming that the expansion rush for market share would remain a dominant and sustainable strategy, at least for a while.

However, the steep income disparities of African economies mean that any further market share growth is scraping the bottom of the ARPU [average revenue per user] barrel: new subscribers are coming from the segments of society that can hardly afford the service.

Low price low balls
Speaking of affordability, it is worth noting that the cost of mobile telephony remains high, relative to economies with comparable income levels in other parts of the world.

The average per-minute tariff in India, for example, is nearly ten times lower than in Nigeria. Expansive growth is already showing diminishing returns and this puts a lot of pressure on networks to improve cost-efficiency if they are to address the poorest segments of the market.

On the other hand, what will matter more will be the networks? ability to retain the juicy customers that sustain profitability.

And it is not an easy task when your market is more than 98 percent pre-pay and when multi-SIM usage ? i.e., owning SIMs from multiple networks and using them selectively to take advantage of the current best offer ? is rampant. Customers can, and do, switch networks at the drop of a hat.

The pressure for affordability on the expansion front, together with the temptation to lure good customers from competing networks with better deals, has set the stage for a price war.

Some believe that Bharti?s acquisition of Zain, with 42 million subscribers in 16 African countries, will serve as a catalyst in this process.

It is no secret that Bharti is operating a low-cost model, based on a lean operation with lower tariffs, prompting higher consumption from existing customers and unlocking access to customers that can only afford the lowest of costs.

Bharti?s stated ambition to reach 100 million subscribers by 2012 under a ?long-term affordability strategy? strongly suggests that this will also be the approach with its newly acquired properties, and it will be at odds with what has been the norm in many African territories so far.

Already, in Kenya, Zain has announced price cuts to 25 percent of previous tariff levels, forcing the other networks to follow suit.

It remains to be seen what will happen in other markets, but chances are that aggressive acquisition campaigns and price cuts are on the agenda in many territories.

What does this mean for mobile marketing?

Retention and cultivation
It means a shift in customer needs towards retention and ARPU cultivation products ? areas in which mobile marketing is particularly strong ? in a territory where mobile channels have excellent performance.

For mobile marketers this represents an opportunity for growth and innovation. Here is what to expect :

1. Carriers will intensify the use of mobile channels to market products and plans to their own customers.

Traditional media are fragmented, weak and expensive in most African countries.

On the other hand, response rates to mobile marketing campaigns are probably the highest in the world. It is a no-brainer.

2. The pressure for cost-efficiency means more emphasis on accountability, measurement of actual results and self-financed business models ? all areas in which mobile marketing excels.

3. There will be a surge of demand for customer loyalty and retention solutions.

African carriers are going to invest in cultivating and protecting the market segment that they have carved out in the market against more aggressive competition.

4. Maximizing ARPU from the existing customer base will become more important.

Expect carriers to invest in technologies and campaigns that facilitate upselling of services or expanding services to access new sources of revenue.

5. The unique characteristics of the market ? for example, in customer behavior, distribution channels, handset capabilities ? necessitate highly customized solutions.

AS COMPETITION intensifies to an acquisition-retention arms race, we should expect to see innovation at the local level. Experience with the nuances of local markets will be an important asset for mobile marketers now and in the future.

Nikos Moraitakis is vice president of business development at Upstream, London. Reach him at .