In this paper we analyze the role of network effects and consumer heterogeneity in the
adoption of mobile phones. We estimate the decision to adopt a mobile phone using panel
survey data of South African households between the years 2008 and 2012, which includes
interviews with all adult household members. We construct variables which approximate
network effects on the household level and find that the greater the number of mobile phones
in the household, the greater the likelihood that the other household members will also adopt
a mobile phone. Moreover, network effects depend on who in the household adopts a mobile
phone. Without within-household network effects the penetration of mobile phones of 76.4%
in 2012 would be lower by about 9.9 percentage points. The decision to adopt a mobile
phone is also explained by observed and unobserved consumer heterogeneity.