African smartphone providers, Transsion holdings, Samsung, suffers sales dip in Q1 2022

Smartphone demand was dented by geopolitical worries in Ukraine and the increasing pressure on consumers due to the increase in commodity and food prices.

African smartphone providers, Transsion holdings, Samsung, suffers sales dip in Q1 2022
495 million people subscribed to mobile services in sub-Saharan Africa

Smartphone sales in Africa have increased in recent years because of improving internet penetration, increasing marketing activities by smartphone vendors, and the availability of low-cost smartphones.

At the end of 2020, 495 million people subscribed to mobile services in sub-Saharan Africa, representing 46% of the region’s population – an increase of almost 20 million in 2019. The demand for smartphones slowed down as smartphone suppliers experienced a dip in sales in Q1 2022.

Counterpoint Technology Market Research, a global technology, media, and telecom research firm has released its Q1 report on smartphone market sales in the Middle East and Africa (MEA).

Smartphone sales in the MEA (the Middle East and Africa) region dropped 3.7% YoY in Q1 2022, according to the latest research from Counterpoint’s Market Pulse Service. Sales were expected to fall during Q1, which is usually a soft quarter, but demand was also dented by geopolitical worries elsewhere and increasing pressure on consumers due to commodity and food price increases.

African smartphone sales report highlights for Q1 2022

  • MEA smartphone sales retreated 4% YoY in Q1 2022, mainly due to macro concerns.
  • Samsung sales dropped YoY but saw their market share rebound from the lows of H2 2021 due to renewed popularity of low-to-mid range devices.
  • Transsion brands saw their first sales drop since the COVID-19 pandemic, mainly due to weakness in Africa’s lower-segment markets.
  • New Chinese entrants Xiaomi and OPPO had a resilient quarter as the supply situation improved.

MEA smartphone unit sales share, Q1 2022 vs Q1 2021

Source: Counterpoint Research Market Pulse, Q1 2022

Notes: Xiaomi includes POCO and Redmi; OPPO includes OnePlus; Figures may not add up to 100% due to rounding

African Smartphone YoY Growth Sales Rate, Q2 2021-Q1 2022

Since H2 2021, analysts have raised concerns about the steady flattening growth rate of smartphone sales YoY. The situation has been exacerbated by the ongoing Russia-Ukraine war.

Commenting on the performance of the Original Equipment Manufacturer (OEMs), Senior Research Analyst, Yang Wang said, “Most key OEMs saw sales drop YoY, but this needs to be interpreted in the context of economic reopening in Q1 2021, which led to pent-up demand that manifested in an unusually high base effect. MEA leader Samsung saw sales and market share losses in Q1 2022, but this was a much more optimistic performance than what the numbers suggest.

“Despite lingering supply issues, Samsung’s new affordable A-series models proved to be popular in the region. Compared to other OEMs, the brand is best positioned in terms of supply chain and product mix, and we expect to see Samsung taking more market share from rivals in the next few quarters, he added.”

“Transsion brands saw their market share increase from 28% to 29% in Q1 2022, but they also saw a sales drop of 7.5% YoY during the quarter, their first sales drop since the beginning of the COVID-19 pandemic. This was mainly due to the weakness seen by Itel, the brand that is skewed heavily towards entry-level, lower-income African customers. On the other hand, Infinix continued to grow strongly on the back of the impressive performance of its mass-market models in the Hot and Smart series. Looking ahead, customer demand in Transsion’s home market Africa is a reason for worry. Local currency depreciation may also put Transsion’s price competitiveness under pressure.”

Xiaomi and OPPO went through a tumultuous H2 2021 and are evidently still influenced by supply chain issues. But despite macro concerns, the two brands performed resiliently in Q1 2022. We expect their market share retreat to bottom out during the middle of the year.”

Africa’s largest mobile phone brand, Transsion Holdings suffers a sales dip first time since 2019

Transsion Holdings, the leading mobile phone brand in Africa, with a market share of 47.9 percent market share saw a 7% decline in sales in Q1 2022. This was the first time Transsion Holdings, which owns the Tecno, Infinix and Itel brands, recorded a decline of that magnitude since 2019.

The prominent African smartphone brand sold 4.6 million Tecno smartphones in Q1 2020, a 2.13% decline compared to  Q1 2019 when it sold 4.7 million devices.

Counterpoint 2020/2021 Q1 Report

Over the years, Transsion Group has built leadership in products, brand awareness, sales channels, user base, and supply chain in the emerging markets it has targeted, especially Africa.

While other global mobile phone giants like Nokia and Samsung brought models that were designed for developed world consumers to Africa, Transsion has been targeting low-tier cities and rural areas in the region since their early days in the region.

Depending on the heavy distribution, sales and marketing, adjust campaigns and go-to-market activities, the smartphone provider has been able to provide phones to the middle and low-income class in Africa.

Weakness in Africa may persist throughout the year, as food price increases will force consumers to pause spending on big-ticket items like smartphones. However, high levels of inflation are not foreign to most consumers in Africa.

Consumer sentiment will definitely be hit, but drastic lifestyle changes are unlikely. And given the trend of urbanisation, digitization and smartphone adoption across the continent, (which is estimated to reach 798 million by 2027) the African market is expected to resume growth once the current situation eases.