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* Subscriber growth to slow to 6 pct 2015-2020
* Weak business case hampers more network deployment
* Impact on margins to raises prospect of more consolidation
By Tiisetso Motsoeneng
JOHANNESBURG, Oct 8 (Reuters) - Growth in Africa's mobilephone users is set to slow sharply in the next five years, astudy showed on Thursday, heralding an end to the boom in anindustry that has spurred the continent's growth.
A report by global industry body GSMA expects subscribergrowth to slow to 6 percent between 2015-2020 compared with 13percent growth in the first half of the decade, citing lack ofcommercial logic in setting up network coverage in some ruralareas, where more than half of the population lives.
"I am bit surprised by this development because I expectedstrong growth to continue because the penetration rate in Africais still well below 100 percent," Mortimer Hope, GSMA's Africadirector, told Reuters.
"One reason for the slowing growth is that some areasespecially in remote, rural communities are not economicallyviable for mobile phone companies to deploy their networkbecause of the low spending power of people living there."
By 2020, a little over 500 million people, or just underhalf the continent's population, will have subscribed to amobile service compared with the global average of almost 60percent, GSMA said in the report.
Mobile phones have been one of the factors behind Africa'srecent growth spurt, by freeing people from the shackles of thecontinent's awful landline infrastructure and allowing them tocommunicate and transact at low cost.
The simple SMS - and more recently mobile social media -have also become powerful political tools, used by grassrootspolitical movements to mobilise support against oppressivestates, such as happened in the north African 'Arab Spring'.
While relatively low penetration rates suggested significantgrowth potential in most markets, the negative impact ofincreasing competition on profit margins is raising the prospectof more consolidation in the region, Hope said.
"Smaller players don't have the economies of scale to drivetheir prices down and compete for long periods, so you'llprobably see some consolidation in the market," he said.
There has already been deal activity in the sector in recentyears with South Africa's Vodacom buying fixed-lineoperator Neotel, which struggled to mount serious competitionagainst larger rival Telkom.
United Arab Emirates' Etisalat sold itsstruggling Tanzanian mobile phone business, Zantel, to Sweden'sMillicom in June. (Editing by Adrian Croft)
