Africa’s mobile internet market has grown steadily over the last
decade and new forecasts show mobile data revenue, will double over the five
years to 2019—topping $22
billion. On the other hand, mobile voice revenue, though still
significantly higher ($50 billion in 2014), will only grow by 10% in the same
period. It means the continent’s telecoms operators will likely intensify
efforts to grab more mobile data market share in coming months.
In Nigeria, the
continent’s biggest mobile market, the race for more mobile internet users has
already kicked off with a shift in telco marketing strategies away from voice
minutes to data package offers. And with this has come a sharp drop in mobile
data prices.
Nigeria’s internet usage numbers has
grown rapidly in the last few years and is now pegged at 92 million, down
by a few million owing
to a recent sim card registration exercise that cut off unregistered users due
to security concerns.
Over the course of the last month, the country’s
leading mobile operators have announced cuts in mobile data prices. The price
cuts were primarily made possible by the deregulation of the data prices by the
Nigerian Communications Commission last October when the regulator announced a
removal of a data floor price, leaving telcos to set prices as low
as possible.
Once the
regulators removed the artificial floor the Nigerian market was always likely
to follow a similar trend seen in the United States and Europe with data
eventually becoming a far valuable proposition for mobile operators than voice.
But cheaper mobile data is likely to have a far more significant impact in a
country with very low fixed line broadband internet penetration.
There’s also a theory that the sharp drop in data prices has also been prompted
by increased competition between internet cable companies in Nigeria.
“Wholesale data has gotten cheaper thanks to the competition among submarine
cable companies,” says Ismaila Sanusi, a Nigerian tech blogger. “At some point,
the only options for getting internet data in and out of the country was the West
Africa Submarine Cable or a pricey direct satellite link. Now you’ve got other
options alongside the old ones all jostling for customers.” Sanusi believes the
net-effect of this has been cheaper data.
The mass adoption of over-the-top (OTT)
services like Facebook and WhatsApp by the Nigerian market has also been great
for business. Despite increased
talk of regulation of
OTT services for “freeloading” telcos’ infrastructure and eating into mobile
voice revenue, mobile operators recognize the potential of these OTT services
to grow mobile data revenue.
Nigeria is Facebook’s
biggest African market and
only Egypt registered more tweets than Nigeria in
2015. As a result of
the popularity of these apps which offer both messaging and voice services,
telcos have created specific plans for various OTT services “as a means to lure
customers in and then up-sell them to full plans once they get hooked,” says
Sanusi. Some have even offered
special packages for Netflix
users.
·
Amid
falling prices, the strategy will not be any different. By making mobile data
cheaper than it’s ever been, telcos are hoping to gain more users who might
later upgrade to more expensive plans
The hope is that the trend catches on in
other African countries as a PwC report shows mobile data prices need to drop
significantly as only43%
of the world can
afford 500 megabytes per month.
In fact prices
in Nigeria need to drop by 97% to become affordable for the majority of the
country’s 180 million people. With the price for 500 MB of data in Nigeria
falling 50% in the last month alone, it appears Africa’s biggest mobile market
could be on its way to meeting that target.
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