Evolving VAS strategies in a data environment: Market overview and forecast


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Evolving VAS strategies in a data environment: Market overview and forecast

  1. 1. This document is offered compliments of BSP Media Group. www.bspmediagroup.com All rights reserved.
  2. 2. Evolving VAS strategies in a data environment: Market overview and forecast Thecla Mbongue Senior Research Analyst – Africa Informa Telecoms & Media Africa Com Masterclass Cape Town, 12 November 2013 www.informatandm.com © Informa UK Limited 2013. All rights reserved
  3. 3. Agenda About ITM Key segments Mobile data KPIs www.informatandm.com © Informa UK Limited 2012. All rights reserved Recommendations
  4. 4. About Informa Telecoms & Media We are the leading provider of insight , events and training to the global telecoms and media community 220 www.informatandm.com © Informa UK Limited 2013. All rights reserved 50 million
  5. 5. About Informa Telecoms & Media
  6. 6. Agenda About ITM Key segments Mobile data KPIs www.informatandm.com © Informa UK Limited 2012. All rights reserved recommendations
  7. 7. KPIs - mobile data usage in Africa • • • 1.8 million mobile data users end-2013 (all services cumulated) Messaging represents 59% of total Mobile financial services (MFS) and Internet access record highest growth rates Mobile data users by segment (million) – end-2013 forecasts Social Networking 3.9% Games 2.8% Others 5.3% Music 4.2% Applications 4.3% Internet 7.3% Mobile Payments/Banki ng 12.8% www.informatandm.com © Informa UK Limited 2013. All rights reserved Messaging 59.4% 6
  8. 8. KPIs Pan-African groups • • • Growing data usage and revenues is key to all pan-African groups’ strategy Mobile Internet and mobile financial services (MFS) concentrate most efforts Boosting local content is also been addressed through sponsorship of developers competitions Total data users MFS users – 3Q13 MTN 13 MTN 50 Safaricom Kenya 11.6 Orange 7.5 Vodacom 21 Airtel 18 www.informatandm.com © Informa UK Limited 2013. All rights reserved Vodacom 5.8 Millicom 13 Millicom 3.7 Orange (SSA) 5 Airtel 1.8 7
  9. 9. KPIs Pan-African groups MTN group data revenues split (US$ million)– 1H13 Vodacom group data revenues split (US$ million)– 1H14 (6 months to Sep-13) Data - other 886 Data - other 601 SMS 275 Messaging 163 MFS 29 VAS 10 Millicom Africa data revenues split (US$ million)– 1H13 VAS - other 28 Internet access 26 Airtel Africa data revenues split (US$ million)– 1H13 Messaging + VAS 192 MFS 26 Data - other 144 SMS 12 www.informatandm.com © Informa UK Limited 2013. All rights reserved 8
  10. 10. Agenda About ITM Key segments Mobile data KPIs www.informatandm.com © Informa UK Limited 2012. All rights reserved Recommendations
  11. 11. Mobile broadband networks deployment • Over 80 million mobile broadband users in 3Q13 • Fourteen new mobile networks were launched in sub-Saharan Africa in 1H13, all of which were mobile broadband networks. Eight were HSPA and six were LTE. • HSPA is set to dominate the landscape over the next five years, though LTE is set to grow faster, accounting for more network launches in 2017. • Challenges include regulation (spectrum issuance) and the cost of backhaul infrastructure. Millions Mobile broadband subscriptions forecast – Africa, 2013 - 2018 800 600 LTE 400 1xEV-DO 200 HSPA 0 2013 2014 2015 2016 2017 2018
  12. 12. Mobile broadband networks deployment: next steps LTE yet to be roll out fully, but on the wish list of most operators Charging premium or not? • Yes, when the operator is early entrant and if superior QoS is ensured. • No if LTE already launched in markets and/or if 3G coverage is consistent. QoS and faster speed should be enough to differentiate itself from a competitor and to target high end users. Besides, high price of devices and lack of subsidy already confines LTE usage to high end segments in Africa. Focus on postpaid an option only if device financing option is implemented • The postpaid segment is less than 1% of mobile subscription base in Smile markets and postpaid contracts are not bundled with a device. • The number of banked population is low in Smile markets but we’ve seen the rise of operators/banks partnerships for device financing in a few countries including Nigeria and Tanzania. Bundling VAS to price plans • So far only Bharti Airtel does it while Smart and Globe just sell data access. Bharti Airtel offers LTE only content in a bid to encourage take-up of services, offering exclusive services for its LTE users. For instance, it offers 35 HD movies in collaboration with Bigflix, a movies-on-demand service, with free access to 10 movies in the first month, followed by INR149 a month for unlimited access.
  13. 13. Mobile broadband networks deployment: next steps Broadband expansion through M&A • Consolidation is usually a survival option for smaller players. Large players should target small players to benefit from relevant spectrum. Alternately, small players might partner between each other to benefit from each other’s assets. In manymarkets, small players (CDMA, WiMAX...) can give access to spectrum, additional infrastructure and also a high-end fixed wireless voice customer base.
  14. 14. Smartphones usage uptake • High growth enabled by more affordable data-capable devices, feature phones and smartphones. • Across Africa affordability is still an issue for the average end-user. However, increased partnerships between handsets manufacturers and operators has been beneficial for the consumers. • At he same time, operators promote more segmented prepaid data plans or sometimes partner with banks to offer handsets financing schemes. Smartphone usage forecast in Africa, 2013 -2018 Millions • Informa forecasts that the number of smartphones in Africa will jump from 79 mill. in 2012 to over 112 mill. end-2013. The number will pass the 400 mill. mark by 2018. 2013 2018 200 150 100 50 0 Egypt Nigeria South Africa Kenya Rest of Africa
  15. 15. Smartphones usage uptake Handsets financing – Vodacom South Africa • Handset financing is one of Vodacom’s key initiative to increase smartphones usage. As at September 2013, Vodacom had 6.6 million active smartphones on its network and represented 22% of the operator’s active subscription base compared to 18% in September 2012. • Handsets financing deals on Vodacom’s network, Sep12 – Sep13 The number of devices on a financing deal with Vodacom increased by 52% year on year to 535,000. However on 6% of the smart devices are insured via the operator’s scheme. 10/07/13 www.informatandm.com © Informa UK Limited 2013. All rights reserved 14
  16. 16. Smartphones usage uptake Smartphone financing schemes introduced in cahs economy marktes • Increased partnership between operators an devices manufacturers • Operators are increasingly facilitating device financing for both prepaid and post-paid users. This is done in partnership with banks and the offer is therefore limited to the bank account owners. www.informatandm.com © Informa UK Limited 2013. All rights reserved
  17. 17. Mobile financial services evolving from basic P2P transfer Government (tax collection) DRC: payment of police and army officers Mauritius: tax collection www.informatandm.com © Informa UK Limited 2013. All rights reserved Schools Utility companies Various countries: school fees. Latest partnership include Moov and University of Togo Various countries: Satellite TV, restaurants, ticketing. Entertainment industry Various countries: Payment of bills (electricity, water). M2M for metering services Financial institutions Various countries: M2M for POS terminals, ATM services for cash out, international remittances (Western Union…), insurance, stock exchange.
  18. 18. Effective data pricing: dedicated OTT price plans Social networks price plans in Nigeria • As price competition increases in the data field, operators segment data price plans further with social network bundles. • In April 2013, Airtel Nigeria launched a dedicated WhatsApp data plan under which unlimited usage is charged NGN100 (US$0.62) per month. The price plan attracted over 400,000 users in 1 month. • In July 2013, launched a data bundle dedicated to social network Eskimi. The bundle is available on a weekly and monthly basis. The weekly bundle is charged at NGN25 (US$0.15) and the monthly bundle is charged at NGN60. According to MTN, Eskimi has about 6 million users in Nigeria. In January 2013, Eskimi partnered with MTN’s competitor Etisalat to provide access to the platform via a dedicated link on Etisalat’s portal. • Airtel WhasApp data bundle Facebok bundles are available on MTN, Airtel and Etisalat. Operators however still offer Facebook Zero access via mobile web browsers. MTN also offers a Twitter bundle. 10/07/13 www.informatandm.com © Informa UK Limited 2013. All rights reserved 17
  19. 19. Effective data pricing: carrier billing to boost app store downloads MTN Nigeria launches carrier billing • In July 2013, MTN Nigeria partnered with US software provider neXva to launch NextApps Store. • The application store consists of free and premium applications and is available online and initially for Android smartphones. • In addition, the store features “one-click” billing that enables MTN subscribers to purchase applications and have the purchase price taken from their pre-paid account or added to their postpaid phone bill. • This is the first time a Nigerian operator offers carrier billing option for payments on apps stores. Until then, Nigerian had to pay for their apps by credit card, which limited the potential buyers to a limited segment of the small banked population. At the same time, Nigerian credit cards are generally not accepted on international platforms, which narrows the buyers to a small segment having bank accounts in Western countries. 10/07/13 www.informatandm.com © Informa UK Limited 2013. All rights reserved 18
  20. 20. Local content: operators’ app stores and portals ideal platforms to boost local content • App stores • Sponsorship of developers’ hub and competitions • Strategic partnership with local institutions, news and entertainment players www.informatandm.com © Informa UK Limited 2013. All rights reserved
  21. 21. Local does not only refers to culture or ethnicity Birth registration services • Service available in Cote d’Ivoire (“Môh Ni Bah”) and Senegal. According to UNICEF about 66% of births are not registered in sub-Saharan Africa. Môh Ni Bah targets the rural population. Registration done via SMS or mobile app by appointed agents in a village or the village chief. www.informatandm.com © Informa UK Limited 2012. All rights reserved
  22. 22. Recommendations Simplicity • Consumers need to access services via clear and easy processes • Do not neglect USSD functionality, as many of African mobile customers still use basic devices • Carrier billing option key to increase the number of app purchases Segmentation • In Africa, the low end segment (i.e most of the population) is used to buy in small quantities, hence the success of small denomination airtime on prepaid • Segmenting per service is also key, as it gives the customer the impression to pay for only what they need Strong Customer awareness strategy • Customer awareness is key to service uptake. Very often new services are only marketed at launch and/or not explained enough to the target audience 16/10/12 www.informatandm.com 21
  23. 23. Thank you Questions? © 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.