Mobile Network Operators (MNOs) in Nigeria are developing new business models that integrate third party Over-the-Top (OTT) providers into service provisioning, with a view to closing the mobile data revenue gap facing the telecommunications industry at the moment, market observers have said.
According to them, the country is witnessing a significant surge in mobile data traffic, driven by the proliferation of smartphones and tablets, without a corresponding increase in data revenues. In view of this, operators are seeking fresh ways to liberalise services such as Facebook, Twitter, Whatsapp, Skype, especially amongst underserved, rural communities.
MNOs are also incorporating the OTT’s offering into their data packages and bundles, in a bid to generate an additional revenue streams, as the OTTs pays a fee to the operator for promoting and selling its service.
Manoj Kohli, former managing director and chief executive officer, International, Bharti Airtel, in an interview, said, “Telecoms operators are now liberalising those services because customers love them”. According to him, mobile data usage is growing tremendously due to the soaring consumption of these OTT services. The industry is very delighted to see services like Facebook, Twitter or Whatsapp becoming popular”, Kohli added.
BusinessDay had reported that some MNOs were planning to block free OTT services on smartphones, over growing concerns of revenue loss on international calls and text messaging.
Such apprehensions are further amplified by telcos’ inability to charge these OTT players for riding on their expensive network infrastructure, due to regulatory constraints. Telecoms operators however may have given that decision to block OTTs a second thought, as such moves could be tantamount to shooting themselves on the foot.
Analysys Mason’s recent forecast for the Sub-Saharan Africa (SSA) region (2012-2017) shows that mobile voice revenue will increase at a 4 percent CAGR, while non-voice revenue will increase 50 percent faster at a 6 percent CAGR. Telecoms companies in the country are however finding solace in mobile data traffic growth, which rose 83 percent quarterly in Q1 2012, according to BuzzCity, though revenues from data services still lag.
MNOs are currently developing innovative offerings, including data plans, strategic partnerships with phone makers and OTT players to meet the growing needs of consumers, according to market observers.
Data services are considered a critical driver of future growth in the country’s highly competitive telecommunications industry, in view of falling revenues from voice services and SMS (Short Messaging Service), though as of mid-2013 the data service market remained relatively small, and value still lags. Ugo Okoye, chief executive officer of iConcepts, a mobile technology solutions provider, thinks that the growth prospects for data services are indeed enormous.
“A lot of communications is no longer happening just on voice especially at the youth segment of the Nigerian market. “There are a lot of mobile applications (mobile apps) coming on stream, such as smartphone messaging apps, Whatsapp, BBM (Blackberry Messenger), social networks.”
According to the iConcept boss, smartphone penetration is on the rise. He further added that mobile operators need to take massive advantage of this growth by encouraging the usage of OTTs to boost mobile data revenues. “Telecoms networks see data as the new revenue stream”, Okoye added in an interview with BusinessDay. Ope Odusan, managing director, Africa.com, in a telephone conversation, urged telecoms operators to become more proactive in terms monetising OTTs, adding that MNOs should change their billing structure for data services.
“Telecoms companies should begin to offer unlimited data services to their subscribers for a fee, like the T-Mobiles and Vodacom’s of this world. It might be a problem for them initially, but in the long run, they would benefit from increased data subscription and spend.”
Market observers have however pointed out that high-speed data services will remain a fairly small niche market for some time. Early last year, only around 25 percent of MTN Nigeria’s data customers subscribed to 3G (Third Generation) services, while the remaining 75 percent used slower, cheaper 2G (Second Generation) services.
With more than 11 million Facebook users, Nigeria, Africa’s most populous country, is now considered sub-Saharan Africa’s largest Facebook user base, according to Celebrating Progress Africa. Jana Mobile Poll however says the country has 45 percent of their mobile users using Whatsapp. Nigeria has about 130 million active mobile subscribers. A new report by Portland Communications, a Kenyan-based public relations agency, claims that Nigerians are the third most active Twitter users in Africa. As at June 2014, there were 67.1 million data subscribers on the GSM networks, out of a population of 170 million people, according to new data released by the regulator on its website. South Africa’s MTN leads the pack in terms of internet subscribers with 33.9 million. Globacom, Airtel and Etisalat have 14.3 million, 12.0 million and 6.8 million active internet subscribers respectively.
Ben Uzor
