Etisalat eyes $1trn digital service market as data uptake powers demand

The Nigerian affiliate of Etisalat, the Gulf’s biggest telecommunications operator, is making plans to aggressively tap into the growing demand for digital service, an industry estimated to generate $1 trillion by 2015.

With Nigeria recording a 200-percent increase in internet users between 2009 and 2013, market observers are of the view that expansion of broadband internet infrastructure across the country is driving up adoption of digital services.

A recent survey of smartphone and tablet users in Nigeria and South Africa, conducted by Informa Telecoms & Media, shows that tablet users spent an average of 2.5 hours per week each watching streamed video, and two hours per week listening to streamed music.

In view of this, Etisalat, a late entrant into the nation’s highly competitive telecoms market, with 19.5 million active subscribers on its network, is angling for a piece of this market.

“We are aggressively going into the enterprise and digital service market. We strongly believe that digital services are a massive growth opportunity for the telecoms industry. But Mobile Network Operators (MNOs) also need to develop the appropriate strategy to make significant in-roads in this area,” said Temi Ogunbambi, director, engineering, Etisalat Nigeria, in an interview with BusinessDay.

Ogunbambi said the telecoms company was creating dedicated units to launch innovations in digital entertainment and commerce services – segments with very high growth potentials.

“We have created a unit called digital media that looks into the market opportunities in that area,” he said.

Market observers say Etisalat Nigeria already possesses a superior data network, compared with its counterparts in the industry, which gives the company further impetus to roll out sophisticated digital offerings such as cloud services, enterprise applications, electronic commerce, amongst others.

Continued investment in network expansion initiatives for 2014 is in excess of $300 million, according to Ogunbambi.

There is a strong appetite for digital services among Nigerian tablet and smartphone users, as reinforced by the Informa survey on Nigeria. According to the survey, smartphone users in the country spent 1.5 hours per week playing online games. Tablet users, on the other hand, spent 2.5 hours per week on the same activity. The survey also showed substantial use of electronic commerce services as Nigerian smartphone and tablet users carried out an average of three transactions per week.

As Nigeria’s vibrant telecoms market continues to develop, Matthew Reed, principal analyst, Middle East & Africa, for Informa, said “mobile operators are not only experiencing and seeking to further encourage a burgeoning demand for data, they are also looking to develop new offerings in areas such as mobile financial services, electronic commerce, mobile payment, digital media, such as music, gaming, and video, and enterprise services such as cloud and Machine-to-Machine (M2M)”.

MTN Nigeria is another operator uncompromisingly moving in this direction. The telecoms company recently acquired about 33 percent equity of Africa Internet Holding (AIH), the parent company of Jumia, one of the country’s leading online retail sites. This acquisition, market observers say, will help MTN to extend its online retail and other essential digital services in Nigeria and other African countries.

This move, market watchers say, is a massive indication that MNOs are working aggressively to build up alternative sources of revenue in an attempt to offset a steep decline in voice revenues, driven essentially by regulatory and competitive pressures. Average Revenue Per User (ARPU) for voice services is expected to decline steeply by around $5 per month over the next five years, down from $6-$7 in April 2013 and $10 in 2008.

The software applications development community in the country is taking advantage of telcos’ push into digital services. Many of them are strengthening ties with mobile operators with a view to developing digitally-enabled businesses.

“The next wave of digital game-changers will emanate from frontier markets such as Nigeria,” said Amit Pau, director, EnterpreneurCountry, an entrepreneurial ecosystem with a 133,000-strong community from Europe, Africa, Asia and South America.

“Nigeria remains very attractive to international investors due to the country’s large and young demographic, huge mobile penetration and usage, strong economic growth indices and the lack of legacy issues that more mature markets face when trying to innovate,” Pau said in an interview.

Seventy percent of Nigeria’s population (167 million) are under the age of 30 and are all digital natives. Nigeria is the fastest growing mobile market in the world, with more than 129 million active mobile subscribers as at April 2014, according to the Nigerian Communications Commission (NCC).

According to Pau, the strength of telecoms infrastructure deployment is also creating a veritable platform for digital revolution, specifically in the area of mobile financial services, e-commerce, and digital content services for the enterprise market.

Interest in Nigerian technology startups and entrepreneurs has been on the increase in the past year, with a number of local and global accelerators setting up shop in Lagos, the nation’s commercial nerve centre, since early 2014.

BusinessDay gathered that Nigeria’s ‘techpreneurs’ are even searching for new business opportunities outside the shores of the country, while eight Nigerians have been selected to participate in the Meltwater Entrepreneurial School of Technology’s (MEST) resident incubation programme. All the expenses are covered by MEST for the two-year duration of the programme. The Nigerians will spend the first year in Ghana learning about technology and business, and the final year in Lagos where they will get down to business building.

Ben Uzor