Are VAS Becoming a Revenue Driver in the Mobile Communications Market in Sub- Saharan Africa?


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An analyst briefing about VAS impact on the mobile communications market in Sub-Saharan Africa.

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Are VAS Becoming a Revenue Driver in the Mobile Communications Market in Sub- Saharan Africa?

  1. 1. Are VAS Becoming a Revenue Driver in the Mobile Communications Market in Sub- Sub- Saharan Africa? Jiaqi Sun, Research Analyst Information & Communication Technologies 30th November 2011
  2. 2. Today’s Presenter Jiaqi Sun, Research Analyst Frost & Sullivan • Jiaqi joined Frost & Sullivan’s African ICT team in 2009. He focuses on analysing the unified communications and telecommunications industry in sub Saharan Africa • Dynamic expertise in mobile broadband, VAS, fixed-line communications, unified messaging, mobile payment, and M&As • Prior to joining Frost & Sullivan, Jiaqi worked briefly as a junior consultant with SHIVA Capital GmbH in Munich Germany, focusing on the automotive and real estate markets of China and India 2
  3. 3. Agenda 1 Introduction 2 VAS Offerings – Present and Future 3 Strategic Objectives and Business Models 4 VAS Opportunities 5 VAS Best Practices 6 Conclusions 7 Q&A 3
  4. 4. IntroductionMobile Services Evolve by Adding ComplementaryMediums of Communications Voice + Messaging + Voice + Multimedia + Voice + SMS Internet Applications Traditional Mobile Basic Mobile Advanced Mobile Communications Communications Communications VAS Delivery Mediums Examples SMS/MMS Premium-rated SMS, SMS/MMS subscriptions USSD Airtime transfer, mobile money transfer IVR Information services by dialing short-codes Web Images, music, game and video downloading Combinations of above mediums WebtoSMS, SMStoEmail, Voice SMS 4
  5. 5. Introduction Primary Categories of VAS VAS Call-related VAS Multimedia VAS Other VAS Enterprises Consumers Messaging: Call Blocking, Call Premium Content: Forwarding, SMS and MMS Mobile Payment (P2B Callback, Missed Subscriptions, IM, Broadband Internet, Mobile Commerce (B2B and P2P), SIM Call Alert, Airtime Voicemail, Voice Ringback Tones, and B2P), Bulk SMS, Rate Replacement, Transfer, SMS, Blackberry/iPhone, Analyzers, Self-Service Cellphone Blacklisting, Reachability SMStoEmail, Conference Calling, Portals, Itemized Billing, Itemized Billing, Mobile Notification WebtoSMS Entertainment and other enterprise VAS TV, and other consumer VASNote: Other enterprise VAS are mainly application-based services including mobile advertising and marketing, premium-rated SMS, FMC/telemetryservices, shared bundles , and customer support services.Other consumer VAS include, among others, CUG, maps, email, and social networking applications. Source: Frost & Sullivan analysis. 5
  6. 6. VAS Offerings – Present and Future Key VAS Market Participants Premium Other VAS Other VAS South Africa Kenya Nigeria Uganda Messaging Content (Consumer) (Enterprise)•Vodacom •Safaricom •Starcomms Network•MTN •Orange •Airtel •Waridtel Operators √ √ √ √ •AccessKenya•Internet •21st Century •Infocom GroupSolutions Technologies •Africa Online•MWEB •Wananchi •Africa Online •Afsat ISPs √ √ Group•Webstorm •iWay Africa Communications •KenyaWeb •Interactive•Content Media Services •MES/Exact Mobile •SMS Media Value-AddedConnect Africa •Liberty Africa •3way Communica- •In2EastAfrica Content and•EA Mobile •Mtech tions •Ultimate Media Catalogue √ √ √ √•35050 Communica- •FIJI Ventures Consult Providers•DSTV Mobile tions•Apple •Datatronics•Google •Google •Peers Consulting •ATX Technology•RIM •Microsoft •Eresoft •BitWork•Comviva •Ericsson •Multisoft Technologies•Ericsson •Nokia Application•VISA (Fundamo) •Samsung Consulting •Future Link Developers √ √ √ √ •Future Technologies•MCI Consultants •eMobilis Technology •Data Fundi•Buzz Bus •Softlink Systems •Yo Uganda•Ad Mob Options •Ericsson•MXit Source: Frost & Sullivan analysis. 6
  7. 7. VAS Offerings – Present and FutureTrends of Major Categories of VAS Offered by NetworkOperators Safaricom Vodacom Orange MTN Airtel Messaging VAS Premium Content VAS Other VAS (Enterprise) Other VAS (Consumer) Decreasing Stable Increasing Source: Frost & Sullivan analysis. 7
  8. 8. Strategic Objectives and Business ModelsStrategic Objectives of VAS Sub-Objectives Tactics Main Objective • Reduce customer churn • •Increase data ARPU • Customer loyalty programs • Drive subscriber growth • SMS televoting services Total Revenue Growth • Boost voice minutes • Dynamic billing structures • Build competitive differentiation • Customer education • Reduce OPEX Source: Frost & Sullivan analysis. 8
  9. 9. Strategic Objectives and Business Models Impacts of VAS Offerings on Business Models Short term Medium term Long term Backward IntegrationStrategies Strategic Alliances Organic Growth Forward Integration • Merging with media andGoals • Partnering with broadcasting service providers • New technology R&D technology vendors and • Acquiring ISPs to enrich portfolios content providers Source: Frost & Sullivan analysis. 9
  10. 10. VAS OpportunitiesMobile Payment and Commerce Services are Primary VASRevenue Drivers in SSA High Telemetry services Rate Analyzers Mobile payment/ Impact on Revenue Growth Video calls commerce Social networking applications If Successful Tracking of mobile phones Mobile advertising/ Bulk SMS marketing Self-service portals Low CUG Mobile TV Low High Probability of Success Source: Frost & Sullivan analysis. 10
  11. 11. VAS Best PracticesDevices and Verticalization are Primary Elements ofBusiness ModelsLow-cost and Advanced DevicesFull Network Coverage Devices are important in mature and high-growth markets as telecommunication service providers are striving to offer new and innovative VAS to attract and retain customers. Operators can enhance their brand awareness by offering handsets Low-Cost and incorporating brand names or embedded applications. Advanced Devices Customized Solutions perCustomized Solutions per Industry Verticals and Segments IndustryFull Network Coverage Verticals and By providing customized solutions/services to different industry Consumer Practicality verticals and consumer segments in each country as well as from Segments and country to country, this practice maximizes the spend potential of Efficiency- different industries and consumer segments. Enhancing Customer relation management (CRM), enterprise resource planning Products (ERP), and subscriber data management applications help providers High Value- understand customers’ requirements and improve customer to-Price support services, driving data uptakes. RatiosPractical and Efficiency-Enhancing Products StrategicFull Network Coverage Alliances Practical applications, such as mobile money transfer/payment/banking services, can enhance customer value Niche Areas through reduced opportunity cost such as time, convenience, and for transportation on visiting banking branches. Differentia- Efficiency-enhancing products, such as monitoring and tracking tion solutions, will improve operating efficiency in production processes, monitoring and other repetitive activities of enterprises. Source: Frost & Sullivan analysis. 11
  12. 12. VAS Best PracticesValue, Partnership and Niche Areas are Key Elements ofCompetitive StrategiesHigh Value-to-Price RatiosFull Network Coverage Value is determined by benchmarking the market (equilibrium) price and service offerings. Operators and ISPs should offer a higher value- to-price ratio than their competitors by charging a lower price and/or offering more content. Low-Cost and Market prices fluctuate in the short term, especially for new services Advanced like VAS, operators and ISPs should forecast future equilibrium Devices Customized market prices and service development trends to preset value-to- Solutions per price ratios. Industry Verticals and Practicality ConsumerStrategic Alliances and SegmentsFull Network Coverage Efficiency- Strategic alliances are an effective tactic to quickly enrich product Enhancing ranges and expand geographical footprints. Products High Value- Network operators can partner with content providers, technology to-Price vendors, and/or ISPs to offer innovative multimedia VAS. Ratios StrategicNiche Areas for DifferentiationFull Network Coverage Alliances Network operators and ISPs should focus on those areas that were Niche Areas poorly developed by existing service providers, such as mobile for applications and telemetry services, as these areas present the best Differentia- opportunity for differentiation. tion Network availability and quality of services are key differentiators for VAS requiring stable network performance and large network capacity. Source: Frost & Sullivan analysis. 12
  13. 13. Conclusions VAS is a new source of revenue and enables Customer New Customer ARPU Organic Retention Recruitment Growth Growth• Reduced customer • Value-to-price • ARPU growth is the • In the long term, the churn rates through targets are a key direct route to organic growth offering VAS retains indicator to assess generating new business model annuity revenues. the impact on new revenue by offering through R&D is customer VAS. most sustainable.• Customer recruitments. satisfaction and • ARPU is boosted • Eventually VAS value are improved • Consumers are through increasing becomes a total through enhancing attracted by data traffic and revenue driver and a user experiences. premium content. voice minutes by niche area for new VAS offered market entrants. • Enterprises put separately and in more value on bundles. quality of services. Source: Frost & Sullivan analysis. 13
  14. 14. Next Steps Request a proposal for Growth Partnership Services or Growth Consulting Services to support you and your team in accelerating the growth of your company. ( or Contact: +27 21 680 3574 Join us at our annual Growth, Innovation, and Leadership 2012: A Frost & Sullivan Global Congress on Corporate Growth occurring in Cape Town in August 2012. ( Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities ( 14
  15. 15. Your Feedback is Important to Us What would you like to see from Frost & Sullivan?Growth Forecasts?Competitive Structure?Emerging Trends?Strategic Recommendations?Other? Please inform us by rating this presentation Frost & Sullivan’s Growth Consulting can assist with your growth strategies 15
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  17. 17. For Additional Information Birgitta Cederstrom Merwin Grootboom Business Unit Leader Account Manager Information & Communications (+27) 21 680 3294 Technologies (+27) 21 680 3263 Christie Cronje Kate Howarth Marketing & Corporate Sales Director Communications Manager (+27) 27 680 3212 (+27) 21 680 3566 17