All About Smartphones: Voice Services Revenue Decline In Nigeria by 14% (Reasons Unveiled)

Tuesday, November 5, 2013

Voice Services Revenue Decline In Nigeria by 14% (Reasons Unveiled)

With growing regulatory and competitive pressure affecting pricing of voice services in Nigeria, mobile operators are responding to the exigencies of the time by reviewing their mobile data strategy in an attempt to offset declining voice revenues, analysts have said.



Africa’s mobile Average Revenue Per User (ARPU) has continued to decline by 14 percent year-on-year since 2004. In view of this, mobile operators have stepped up investments in expansion of 3G network coverage this year.

Analysts told BusinessDay that telecoms are also placing particular emphasis on bundling smartphones with innovative mobile-data packages as well as engaging content providers to enable users consume locally-relevant services on their devices.

These moves, according to them, have become imperative considering recent forecasts which have shown that Nigeria’s vibrant telecommunications market will be essentially driven by mobile data over the next five years.


“Voice service revenues are declining year-on-year in Nigeria and other markets in sub-Saharan Africa. In view of this, mobile operators are responding to the development by constantly reviewing their mobile data strategy to eke out more revenue,” said Adebayo Oyewole, formerly of MainOne. 

 

Mobile voice, according to analysts at Analysys Mason, has long been the largest source of revenue for mobile operators in sub-Saharan Africa (SSA), representing 82 percent of all mobile retail revenue in 2011. 

 
Voice pricing has been on a downward trajectory in the country during the last five years due to the continued decline in mobile termination rates released by the Nigerian Communications Commission (NCC). Over the past three years, telcos have been very exuberant in the telecoms market, lowering mobile call tariffs and giving away lots of free minutes in a conscious bid to garner more market share. This move, industry analysts say, has contributed significantly to steady decline in voice service revenues.


Analyst Mason’s recent forecast for the SSA region (2012-2017) shows that the number of mobile subscribers will increase at a 7 percent Compound Annual Growth Rate (CAGR) during the next five years, reaching 727 million subscribers in 2017.

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 across SSA are, however, finding solace in mobile data traffic growth, even though value lags, growing 83 percent quarterly in Q1 2012, according to BuzzCity.


“We do not expect this rate of growth to show any significant change in the short-to-medium term,” Andre Beyers, chief marketing officer, Airtel Africa, was quoted as saying in a recent report. With further increase in smartphone penetration, continuous expansion of network coverage and the introduction of innovative products and services, according to him, “this growth rate might even further improve”.
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