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Digital Services in Africa: New revenue opportunities.

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  • 1. This document is offered compliments of BSP Media Group. www.bspmediagroup.com All rights reserved.
  • 2. Digital services in Africa: New revenue opportunities AfricaCom 2013 Matthew Reed Principal Analyst Informa Telecoms & Media
  • 3. Data revenues play an increasingly prominent role in Africa’s growth story Africa, mobile voice and data revenue forecasts, 2012-2018 www.informatandm.com • The story of Africa’s telecoms market continues to be about growth. • There were 778 million mobile subscriptions in Africa at end-June 2013 and ITM forecasts that the continent’s mobile-subs count will reach one billion during 2015 and 1.2 billion by end-2018. • Mobile voice revenues in Africa are forecasted to continue growing over the next few years. • Mobile data usage and revenues are growing strongly in Africa, and at a faster rate than voice revenues. • Annual mobile data revenues on the continent are forecasted to rise from US$8.5 billion in 2012 to US$23.2 billion in 2018. 2
  • 4. Non-SMS services will lead the growth in data revenues in Africa Africa, SMS and non-SMS data revenue forecasts, 2012-2018 (US$ million) • Non-SMS data revenues will grow strongly and will account for an increasingly substantial part of data revenues. • ITM is forecasting that non-SMS mobile data revenues in Africa will rise from about US$5billion in 2012 to almost US$20 billion in 2018. • A large part of those non-SMS revenues will relate to data connectivity. • But the rise in data connectivity in Africa is also creating a platform for a range of new digital services on the continent. Source: Informa Telecoms & Media www.informatandm.com 3
  • 5. Digital services in Africa: A view from the industry Views on the digital service opportunity in Africa • Are digital services important to the African industry? • 50% of survey respondents strongly agreed that African operators should explore opportunities in digital services now. • 49% strongly agreed that African operators that do not develop digital services risk being left behind. • Few respondents thought Africa is not ready for digital services, or that African operators should not venture into this area. www.informatandm.com 4
  • 6. Digital service opportunities in Africa: A view from the industry The most important digital services for generating increased revenues in Africa, now and in five years www.informatandm.com • What does the digital service opportunity in Africa comprise? • Mobile-money services ranks first – it is seen as the most important category of digital service currently by 47% of respondents. • Mobile money is expected to continue to be the most important category in five years’ time. • Social-media is ranked second now and third in five years’ time. • E-commerce is expected to become increasingly important; it is seen as the second most important category in five years. 5
  • 7. Digital service take-up in South Africa: Consumer survey South Africa, mobile service usage, consumer survey 2013 www.informatandm.com • Among the most popular data and digital services in both Nigeria and South Africa are: e-mail; instant messaging; browsing the Internet; and social networking services. • In South Africa, smartphone users spend an average of 1.5 hours per week browsing the Internet and 2.5 hours using social-media services. • Instant messaging is very popular with South African smartphone users, who send an average of 150 instant messages a week compared with 25 e-mails. 6
  • 8. Digital service take-up in Nigeria: Consumer survey Nigeria, mobile service usage, consumer survey 2013 www.informatandm.com • The survey also revealed significant use of e-commerce, gaming, music, video and VoIP services. • In both Nigeria and South Africa, smartphone and tablets users carried out an average of three e-commerce transactions per week. • Nigerian tablet users spent an average of 2.5 hours per week watching streamed video and two hours per week listening to streamed music. • In both Nigeria and South Africa, smartphone users spent 1.5 hours per week playing online games while tablet users spent 2.5 hours per week on online games. 7
  • 9. Mobile financial services: Safaricom’s M-Pesa service Safaricom’s M-Pesa revenues, financial years 2010-2013 www.informatandm.com • Safaricom’s M-Pesa, which was launched in 2007, had 17.1 million users by March 2013 and contributed KES21.84 billion (US$252 million) to Safaricom’s revenues in the 2013 financial year. • Safaricom’s revenues from M-Pesa in the 2013 financial year were up by 29.5% year-on-year and accounted for 18% of the operator’s total revenues for that year. • Non-voice services contributed 33% of Safaricom’s revenues in the 2013 financial year, with M-Pesa accounting for more than half of those non-voice revenues, while the rest was split fairly evenly between SMS, and fixed and mobile data. 8
  • 10. Mobile financial services: Deployments in Africa gather pace • Vodacom Tanzania said it had 4.9 million M-Pesa customers in March 2013 and that M-Pesa accounted for 14.1% of service revenues in year to March 2013. • Most other major operators in Africa have also introduced mobile-money services. Orange launched Orange Money in Cote D’Ivoire in 2008 and the service is now offered by a dozen of Orange’s operations in MEA. • Airtel offers mobile-money services across much of its African footprint through a partnership with Ecobank. • Etisalat has launched mobile-money services in a number of its African operations, including those in Egypt and Nigeria. • MTN said it had almost 12.1 million mobile-money customers at the end of June 2013, a year-on-year increase of 64.5%. • Early in 2013, Millicom unveiled a new strategy based on the growth in digital services, such as mobile money, in Africa and Latin America. Millicom said that it expects to make revenues of between US$600 million and US$1 billion a year from mobile financial services by 2017. www.informatandm.com 9
  • 11. E-commerce: Gaining momentum in Africa • E-commerce is new to much of subSaharan Africa, but is gaining momentum, as demonstrated by the launch and growth of services such as Jumia and Konga. • Jumia is a shopping portal that sells consumer electronics and fashion goods; it has operations in Cote D’Ivoire, Egypt, Kenya, Morocco and Nigeria. Konga is a Nigerian shopping portal that also focuses on fashion and electronics. • Jumia is backed by Rocket Internet, a Berlin-based incubator, which is also behind several other ecommerce ventures in Africa. www.informatandm.com Jumia Nigeria online shopping service • Millicom has acquired a 20% stake in Rocket’s African and LatAm ventures. • Millicom expects its partnership with Rocket to bring in annual ecommerce revenues of US$1 billion by 2017. 10
  • 12. E-commerce: Orange’s strategy • Orange is also addressing the e-commerce market in Africa – and elsewhere – through a new subsidiary, Orange Horizons. Orange Horizons’ brief is to develop new businesses, such as online stores, other digital services or MVNOs. • The first two projects launched by Orange Horizons were aimed at the South African market. One of the projects is an online store that sells telecoms devices and accessories, and the other is a content website that hosts news and other editorial designed for a South African market. Orange online store, South Africa Source: Orange www.informatandm.com © Informa UK Limited 2013. All rights reserved 11
  • 13. Digital media: Fuelled by the rising use of smartphones and tablets • The growing availability of mobile broadband networks in Africa, combined with the take-up of advanced devices such as smartphones and tablets, is fuelling a rise in the use of digital media such as gaming, music, social-networking and video. • That growth is demonstrated by operator results, such as those from MTN Nigeria, which said recently that the number of unique users of its content portal MTN Play rose from 135,000 in October 2012 to 720,000 in March 2013. MTN Nigeria Afrinolly app Source: MTN Nigeria www.informatandm.com © Informa UK Limited 2013. All rights reserved 12
  • 14. Digital media: partnerships are key • MTN Nigeria is offering a dedicated data plan for Eskimi, the Nigerian social-networking service. Subscribers can buy unlimited access to Eskimi, which claims to have six million users, for a flat weekly or monthly fee. • In 2012, Orange launched the musicstreaming service Deezer in Africa through its subsidiaries in Cote D’Ivoire and Mauritius, by bundling access to Deezer with broadband subscriptions. • Orange also has an agreement with games publisher Gameloft to distribute Gameloft titles in Africa and the Middle East. www.informatandm.com © Informa UK Limited 2013. All rights reserved 13
  • 15. Enterprise market: An increasingly important target for operators in Africa • Orange is extending its business-market activities and portfolio in Africa through its Orange Business Services unit. • Orange is able to take advantage of its substantial resources in the region, which include: its local subsidiaries; its investments in submarine cables connecting to Africa; and assets such as the Orange Labs R&D unit in Cairo and customer-service centers in Cairo and Mauritius. • Vodafone recently revealed that its revenues from Africa’s business sector have been growing strongly, exceeding €1billion (US$1.4 billion) during the year to March 2013. The operator said it would set up new offices in Nairobi and Accra to serve the business market. • Among MTN’s new services for the business market are a portfolio of cloud-based software services for SMEs, which it launched in Ghana and Nigeria in April 2013 and plans to extend to Cameroon, Cote D’Ivoire, Uganda and South Africa. www.informatandm.com © Informa UK Limited 2013. All rights reserved 14
  • 16. Digital will re-shape the industry: Survey Which types of company are/will be the most influential in the African telecoms industry today and in five years? www.informatandm.com • Operators are seen as the most important players in the industry and are expected to retain that role in five years’ time. • But operators will see their relative importance in the industry decline over the coming five years. • Operators are the only major category of player that is expected to experience a decline in importance. • Device manufacturers, media companies and OTT providers are expected to see notable increases in their importance in the industry. • Successful operators will be those that adapt best to change. 15
  • 17. Africa Telecoms Outlook 2014: Maximizing digital service opportunities New report published by Informa Telecoms & Media: Visit ITM Industry Research stand C5b to collect a free copy. www.informatandm.com 16
  • 18. Contact: Email: matthew.reed@informa.com Telephone: +971 (0)4 4907 2671 www.informatandm.com © Informa UK Limited 2013. All rights reserved 17
  • 19. © Informa UK Limited 2013. All rights reserved The contents of this publication are protected by international copyright laws, database rights and other intellectual property rights. The owner of these rights is Informa UK Limited, our affiliates or other third party licensors. All product and company names and logos contained within or appearing on this publication are the trade marks, service marks or trading names of their respective owners, including Informa UK Limited. This publication may not be: (a) copied or reproduced; or (b) lent, resold, hired out or otherwise circulated in any way or form without the prior permission of Informa UK Limited. Whilst reasonable efforts have been made to ensure that the information and content of this publication was correct as at the date of first publication, neither Informa UK Limited nor any person engaged or employed by Informa UK Limited accepts any liability for any errors, omissions or other inaccuracies. Readers should independently verify any facts and figures as no liability can be accepted in this regard - readers assume full responsibility and risk accordingly for their use of such information and content. Any views and/or opinions expressed in this publication by individual authors or contributors are their personal views and/or opinions and do not necessarily reflect the views and/or opinions of Informa UK Limited.