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
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

Agenda

About ITM

Key segments

Mobile data KPIs

© Informa UK Limited 2012. All rights
reserved

Recommendations

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220


50 million

About Informa Telecoms & Media

Agenda

About ITM

Key segments

Mobile data KPIs

reserved

recommendations

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%


Messaging
59.4%

6

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


Vodacom
5.8
Millicom
13

Millicom
3.7
Orange (SSA)
5

Airtel
1.8

7

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


8

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

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.

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.

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

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


14

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.


Mobile financial services evolving
from basic P2P transfer

Government
(tax collection)

DRC: payment of
police and army
officers

Mauritius: tax
collection


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.

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


17

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


18

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


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.

reserved

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


21

Thank you
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