• Thursday, May 23, 2024
businessday logo

BusinessDay

Telcos turn to SMEs for new growth as computing demand rises

Telecommunications operators in Nigeria are aggressively pushing into the Small and Medium Enterprise (SME) space in an attempt to counter the impact of declining ARPU (Average Revenue per User) from voice-oriented services on the bottom line, whilst driving up future business growth and profitability, market observers say.

ARPU for voice services is expected to decline to around $5 over the next five years, down from $6-$7 in April 2013 and $10 in 2008.

BusinessDay investigations show that MTN, Airtel, Etisalat and Globacom have all in recent times discreetly branched out dedicated business units to focus on the nation’s 17.6 million SMEs.

“In this era of globalisation, many SMEs today require strong IT and telecoms support so as to be able to render effective services to their teeming clients,” said Segun Ogunsanya, chief executive officer, Airtel Nigeria.

Industry statistics show that about 80 percent of businesses in Nigeria, Africa’s most populous nation, are SMEs. But majority of them are not doing well in terms of overall contribution to the economy, particularly from a value-add perspective.

Industry experts who spoke with BusinessDay identified poor access to requisite internet and computing resources as one of the major drawbacks to their success.

With the massive investment being ploughed into network expansion and facility upgrades, mobile operators are better positioned to provide this sort of support to small businesses always, said Ogunsanya at a recent product launch in Lagos.

Market watchers are, however, of the view that while small businesses are beginning to expand their footprints within the country and abroad, the importance of data and mobility solutions in managing their sales force and operations, as well as catering to customer requirements, has indeed increased massively.

“Telecoms operators also have an opportunity to increase their ARPUs by bundling their existing connectivity service offering along with cloud services,” said Tony Ma, senior managing consultant, Global Business Consulting, Huawei, in a paper presentation.

According to Ma, mobile operators would be able to up-sell higher bandwidth packages to SMEs for a higher demand for cloud services. Telcos are also diversifying their product portfolios to meet the computing demands of SMEs, providing them with quality IT services without the cost burden of procuring, installing and maintaining IT hardware and software. “Telecoms operators currently have an existing relationship with SMEs customers and can provide better support and utilise their existing platform to provide bundle offering of cloud services,” said Ma.

Airtel Nigeria has introduced Airtel Web Services, a robust enterprise solution that offers a wide bouquet of services, ranging from web hosting to document management.

With Airtel Web Services, setting up basic yet essential IT services like emails, web hosting, document management and storage can be achieved with zero initial capital expenditure and minimal monthly expenses.

Only recently, MTN Nigeria launched a cloud service for SMEs in Nigeria. Speaking at the launch of the service in Lagos, Babatunde Osho, chief enterprise solutions officer, MTN Nigeria, said SMEs would now be able to enjoy enterprise solutions without the usual attendant costs.

“No matter what entrepreneurs need, MTN Cloud Services can help take their business to new heights,” Osho said.

He further observed that technology had become a critical differentiator and enabler for businesses and as such offerings like MTN Cloud Services could prove to be a critical success factor for SMEs due to their flexibility and pay-as-you-go cost structure.

Cloud service is an internet-based computing in which large groups of remote servers are networked to allow the centralised data storage and online access to computer services or resources.

It is estimated that the public cloud market in 2014 would be worth $156 billion and would be growing by 17 percent CAGR till 2016. Majority of this growth would be contributed by the SMEs looking at cloud-based services like computing, storage, big data, business applications and disaster recovery solutions. According to a recent cloud-readiness study, the SME cloud market in 2012 was $45 billion and is expected to grow to $95 billion by 2015 at a compounded rate of 28 percent.

With a large installed SME customer base, Nigeria’s telecoms operators are ideally positioned to provide additional business tools via the cloud.

Ben Uzor