Composition and evolution of ICT price baskets in AfricaITU Indicator Workshop

Addis Ababa

October 2015

1

Intro

‣ Evolution: From baskets to bundles

‣ Pricing in the African context is unique

‣ How do we capture data in a dynamic market?

‣ Enter: RAMP - RIA Africa Mobile Pricing Index • 46 African countries

• Updated quarterly

2

RAMP - RIA Africa Mobile Pricing Index

1. Africa Prepaid Pricing Index 1. Baskets - Origin

2. Changes

2. Bundled Value Index 1. Market Evolution

3. Postpaid Value Index

4. Mobile Broadband (Data) Value Index3

1 - Africa Prepaid Pricing Index

4

OECD (2010) Mobile Basket Methodology

‣ Pricing products for baskets of minutes and SMS

‣ At least two largest mobile operators based on subscribers numbers

• The operators covered should have between them at least 50% market share

‣ Cheapest products for country comparison

5

40 calls/60 SMS prepaid monthly

Basket Methodology Weaknesses

‣ Baskets do not reflect the most popular package but the cheapest product

‣ The same basket is used for all operators: off-net/on-net ratio depends on market share

‣ Only the two largest mobile operators - new entrants and small operators are likely to be price challengers

6

Expanding OECD Methodology to all operators and all products in a country

7

OECD Basket Methodology

Comparing Countries

Comparing Operators

Comparing Products

Comparing countries

8

Comparing cheapest product available from dominant operators cheapest operator most expensive operator

Comparing the difference between cheapest in country - cheapest from dominant operators cheapest in country - cheapest from most expensive operator

Benchmarking

9

Dominant operatorEgypt

GhanaSudan

EthiopiaMauritius

KenyaRwandaTunisiaAlgeria

LibyaSouth Africa

NigeriaUganda

Sierra LeoneNamibia

MozambiqueBotswana

Benin 11.3711.14

10.139.439.26

8.447.27.187

6.335.91

5.064.264.053.9

2.832.732.57 Egypt

GhanaSudan

EthiopiaMauritius

KenyaRwandaTunisiaAlgeria

LibyaSouth Africa

NigeriaUganda

Sierra LeoneNamibia

MozambiqueBotswana

Benin 11.3710.1510.13

8.249.26

7.024.544.97

76.33

5.735.06

1.464.053.9

1.062.13

1.61Cheapest operator

Cheapest Prepaid product in country in US$ Q2 2014

Prices have remained the same in local currency for cheapest dominant Africa (Safaricom Kenya) and South Africa (MTN)

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

25 2628 27

23

28 28 29 2826

2321

19 18

13 14 14 1416

17.5 17.3 17.8 17.015.0 15.6 14.9 14.6 13.9

12.4 11.7 11.1 10.9 10.27.6 7.5 7.8 7.7 7.4

3.8 3.8 3.8 3.5 3.9 3.8 3.8 3.4 3.3 3.3 3.0 3.0 2.6 2.3 2.3 2.3 1.7 1.7 1.6

Cheapest dominant operator in Africa in USDCheapest dominant operator in South Africa in USDSA Dominant Operator Rank

Alternative comparisons

SA operators rank lowly on the index when compared to other african markets Algeria and have introduced new cheaper products pushing down S.A’s rank

African Prepaid Pricing Index

Prepaid Pricing Methodology

12

13

The Bundled Value Index (BVI)

14

New bundle offerings

15

Need for additional data (ARPU/MoU) to create new baskets

Bundle Value IndexBVI looks at bundles that include voice or sms and data

Bundled Value IndexProducts increase in Q2 2015

New pricing strategy for all operators in country except for SA, Kenya and Ghana

Airtel Tanzania best performing in Q1 2015 toppled by Orange Kenya Q2 2015

South African products closer to bottom of the rank

Ethiopia ranks quite low in terms of value compared to other operators (Q2 2015)

Orange KenyaCV Movel

Unitel (ex T-Mais Cape Verde)Yu Kenya

Airtel GhanaZanzibar Telecom Limited

Smart UgandaAirtel TanzaniaTigo Tanzania

SudaniUganda Telecom

MTCSmart Tanzania

Vodafone GhanaTigo Ghana

Tigo SenegalEtisalat Egypt

InwiAirtel Madagascar

Orange SenegalAirtel Kenya

Vodacom TanzaniaTelma

Movitel MozambiqueAirtel Uganda

Orange MadagascarMTN CameroonVodafone Egypt

MTN South AfricaOrange Africell Uganda

MovicelMobilisCell C

Orange CameroonTigo

MTN UgandaOrange Botswana

MTN NigeriaLibertis (Gabon Telecom)

Ethio TelcoTN Mobile 2.3

2.93.94.55.86.16.26.910.110.111.912.913.618.218.218.719.119.419.720.020.226.628.533.538.343.946.053.956.058.561.7

73.487.289.9

107.3115.7

144.9171.9

197.1197.1

259.7

Q2 2015 BVI best operator

Airtel Tanzania

Sudani

ZanTel

MTC

Tigo Ghana

Airtel Madagascar

Airtel Kenya

Telma

Airtel Uganda

Vodacom Tanzania

Orange Senegal

MTN South Africa

Orange Madagascar

Tigo Tanzania

Orange Africell Uganda

Movicel

Cell C

MTN Uganda

EthioTelecom

TN Mobile 2.26

2.85

5.76

9.79

11.23

12.16

12.74

13.00

14.84

15.94

17.74

18.02

18.38

19.42

25.80

39.38

43.23

57.62

73.31

79.71

Q1 2015 BVI best operator

RIA’s Mobile Broadband Pricing Index

19

Prepaid Broadband Baskets

‣ Prepaid mobile broadband data bundles • 1GB baskets

• 1MB baskets - outdated

• 1 Day baskets, 1 week - uncapped data bundles valid for at least 8 hours of one day - converted to one month

20

Prepaid data market - Q2 2015Increased countries we collect in Q2 2015 from 21 to 36 african countries

Rwanda’s Tigo cheapest dominant operator 1GB price at USD4.39

Tanzania Zantel cheapest operator 1GB price

Swaziland most expensive product offering on the 1GB price assessment

Ethio Telecom is relatively cheap in terms of data in Q2 2015

TanzaniaKenya

RwandaMozambique

GhanaTunesiaSudan

MauritiusMalawi

South AfricaNigerTogo

SenegalBurkina Faso

NigeriaSao Tome and Principe

UgandaEthiopia

BeninAlgeriaLiberia

MaliMali

NamibiaCameroon

MadagascarLesothoZambiaGabon

ChadCote d'Ivoire

AngolaSierra Leone

BostwanaZimbabweSwaziland 37.7

30.028.3

24.022.6

16.916.916.916.5

14.914.6

13.513.2

12.612.6

12.010.210.19.8

9.39.19.1

8.48.48.48.48.28.1

7.35.8

5.24.54.44.44.33.8

Cheapest 1GB price USD Dominant operator in country

RwandaMozambique

TunisiaTanzania

MadagascarNiger

SenegalBurkina Faso

KenyaGhana

Sao Tome and PrincipeEthiopia

BeninAlgeriaMalawi

UgandaLiberia

South AfricaMaliMali

NamibiaNigeria

TogoChad

Cote d'IvoireZambia

CameroonGabon

Sierra LeoneSudan

AngolaLesotho

BostwanaZimbabweSwaziland 37.7

35.030.9

27.324.424.424.023.6

20.218.0

16.916.916.916.7

13.212.612.612.312.011.6

10.610.210.19.8

9.19.19.0

8.48.48.48.18.0

5.24.44.4

1GB price USD Cheapest operator in country

Value for Money Index - Discontinued

23

Download/Upload speed kbps

24

0 10000 20000 30000 40000 50000 60000

Glo Mobile Ghana Airtel Nigeria

Airtel Uganda Orange Botswana Vodacom Tanzania

MTN Rwanda Airrtel Rwanda

Mascom Orange Uganda

Tigo Rwanda Vodafone Ghana

MTN South Africa Orange Kenya

Airtel Ghana Smile Uganda

CellC MTN Nigeria

Vodacom Mozambique MTN Uganda

Smile Tanzania Smile Nigeria

MTC Vodacom South Africa

Telecom Namibia Mobile Safaricom

Average Combined kbps Average Download kbps Average Upload kbps

Source: www.ookla.com

Combined average speed in kbps/1GB price in USDQ1 2014 - Value for money index

25

0

400

800

1200

1600

Safa

ricom

Ken

ya

Voda

com

SA

Smile

Nig

eria

Smile

Tan

zani

a

TN M

obile

Nam

ibia

MTN

Uga

nda

Cel

l C S

A

Ora

nge

Keny

a

MTN

Nam

ibia

Voda

com

Moz

ambi

que

Smile

Uga

nda

Airte

l Gha

na

Voda

fone

Gha

na

MTN

Nig

eria

MTN

SA

Ora

nge

Uga

nda

Voda

com

Tan

zani

a

MTN

Rw

anda

Airte

l Rw

anda

Tigo

Rw

anda

Mas

com

Bot

swan

a

Airte

l Uga

nda

Airte

l Nig

eria

Glo

Mob

ile G

hana

Ora

nge

Bots

wan

a

Postpaid Value Index (PVI)

26

The Postpaid Value Index

27

Postpaid makes up a fairly small share of the mobile market in Africa The index only takes into account the top 12 economies with the highest share of postpaid Benchmarking within country (between operators) is just as important as benchmarking between countries

The Postpaid Value Index

28

Applied Example: South Africa

29

What do we do with all this information? Policy example

30

Cost of cheapest prepaid mobile product for OECD 40 calls/60 SMSs basket by operators in ZAR

South Africa - Decline in MTR’s

31

0

45

90

135

180

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Telkom Mobile Cell C MTN South AfricaVirgin Mobile Vodacom South Africa

MTR 40c

Amendment MTR 20c, asymmetry

44c

Summary

32

Aim is to protect the interest of the consumer For data to inform policy Collection is the easy part - All states should be doing this Data has to be carefully analyzed and understood in context of financial information and other supply and demand side indicator Continuously evolving market - indicators must evolve to keep up