Telecoms in East Africa should look to data for mobile growth

Posted on March 30, 2013 05:42 pm

Mobile network operators in East Africa should look to data traffic growth and increased data prices as a means of arresting voice revenue decline in one of the fastest growing mobile market in sub Saharan Africa. Over the last few months, a couple of operators have been sending pricing signals to customers to help manage this finite resource. Unlike two years ago, there is a clear movement towards data usage among users in the four member states of East African community namely Kenya, Uganda, Tanzania and Rwanda where customers are using less mobile voice and SMS services. The loss of SMS service business is fatal to mobile operators and is highly attributed to the rise of over the top apps such as WhatsApp and iMessage that have become a hit with mobile subscribers in the region. Such apps have provided rich communications over a data connection, allowing customers to forgo SMS use. Customers have an economic incentive to use over the top apps in an otherwise low Income region.

One way out for telecoms in East Africa is to fight back with the addition of mobile plans offering unlimited SMS. They should also look to build their own rich communication suite and if possible provide a timeline for the development that could help them retain subscribers’ confidence. I do think that another option for business growth would be for the operators to look at introducing of shared data plans, which are popular in developed markets like Finland, Norway and Denmark. Such a plan would allow customers to have a single data allowance spread over multiple devices that most network operators are offering. The regional market leader by subscribers’ and revenue Safaricom, a Kenya mobile network operator 4G Network has experienced solid growth, with hundreds of thousand of customers with 4G handsets. Safaricom is actively pushing its’ highest level data consumers onto the new 4G network. According to internal study conducted by Safaricom last year, the customer satisfaction for 4G is very high compared to 3G.

Moving customers onto 4G allowed more headroom for million of customers who opted to remain on the 3G network. Another area of data growth is for mobile network operators to invest in cloud computing, big data, mobility and business simplification to create value as has been the case with MTN in Uganda, Safaricom in Kenya and Vodacom in Tanzania. I also think that a focus on profit, to the exclusion of everything else, would not create long term value for mobile operators in the region. This is because it is a matter of being a telecom business, where they should play in the value chain of providing services. Cloud business could be a game changer for mobile operators because growing demand from consumers, small- and medium-sized businesses and enterprises in the sub Saharan most economically vibrant region. Operators should also improve customer service by realigning their internal culture, and through big data technologies that could allow it to better understand consumer demands.

 

Contador Harrison