Operators in Africa will need to shift their business models as data revenues surpass voice revenues by 2018, driven by increasing demand for services like video and messaging apps. Traditional models relying on voice and SMS will not be sustainable long-term. Operators will need to focus on infrastructure and providing data delivery, while new services will be led by international and local companies. The deployment of LTE will accelerate this transition by enabling more data-intensive uses of mobile internet. Operators have a choice to resist these changes or to proactively develop new strategies for the future of their businesses in this shifting landscape.

1. Impact of innovations on the
business models of operators
Africa Telecoms Forum 2013, Marrakesh
Russell Southwood, CEO, Balancing Act
Consultancy and research company focused on
telecoms, Internet and Broadcast in Africa

2. The new business model – Everything
becomes data but what does it mean for
operators in Africa?
 Recent GSMA report: Data revenues will exceed
voice revenues by 2018 globally. Kenya by 2016.
Just three years away, within current business
cycle
 Safaricom drops unlimited bundles on wireless.
Some users hogging bandwidth. Unlimited only
suited to fixed network which is dedicated
 MTN – It says it will be a service company and
launch Triple Play 2013/2014

3. Everything will be IP
 Two broad categories of operators: Those who provide data delivery
and those who provide services using data delivery
 No longer minutes but a data package or allowance
 Pricing conundrums
 Value of say an international minute and its data equivalent. Wholesale
fractions of a UScent vs US10s of cents retail. Free via Skype peer to
peer or cheaper via breakout.
 Value of say an SMS or an equivalent message sent via Facebook or
What’s App. Europe and USA have reached “Peak SMS”
 Wi-Fi coverage vs on-net/off-net charges – Everything but the road
 Operator Challenge
 Sprint: Android users = 1GGB per month. Need to build new
data network out of falling data revenues
 Namibia: MTC customers (100,000) are using 1.6 GB per day

4. What do Africa’s key users want?
 Africa’s tech savvy generation grows up (18-35). Imagine them
3-5 years older
 Stuff supplied by OTT companies:
Facebook, Skype, Amazon, Google, Twitter and Apple.
 Local variants: Mxit, 2go, biNu and Eskimi.
 Video (music, film, sport), examples iROKO, Buni TV, etc; video
calling; network gaming;
Do operators do content?...Errrr, No
 Almost identical SMS offers. Little local content. Poor value.
 With exceptions, VAS departments do not understand key
demographic, have little management influence and following
elsewhere globally is not leading
 The SMS content deal is broken and cannot be fixed long-term

5. The new African operators
 Infrastrucure: Stop selling data “shortage” Stop banging on
about dumb pipe.Yes, it’s a commodity business so get
volume. Maximise data sales – BAMN. Highest
volume, lowest prices
 Implication: 1-2 infrastructure operators; consortia models.
Some mobile operators as MVNOs.
 Typical day: Talking to Skype account manager, ironing out
blockages for VoD operator, investigating three new
transaction based services
 Services: International companies; Regional companies;
local with one or two countries (Swahili)
 Advertising or transaction based. Infrastructure players
sharing 30/70. Increase in online advertising, particularly
social media

6. LTE as the driver of change
 It will be the accelerator of data use. Already 5+ LTE
implementations but at least a dozen by end 2013. One does
it, everybody has to do it
 3G or 3G+ only looked good because all other offers were so
bad. On-going problems with network congestion
 Smile Communications in Uganda: Actual speed of 6 mbps
 Early indications of likely uses: Consumer video, video
conferencing (Skype), high-end graphic and video transfers
 Africa will play its part in solving the handset problem by
generating demand

7. Getting from here to there
Two broad options
1. Trench warfare – Fighting every inch of the
way – seeing the future through the rear
view mirror
2. Starting now to put in place tomorrow’s
strategy – being part of the change
REMEMBER – No company is owed a living.
You are either part of the future of part of the
past. The choice is yours.