Evolving VAS strategies in a data environment: Market overview and forecast

This document is offered compliments of BSP Media Group. www.bspmediagroup.com

All rights reserved.

http://www.bspmediagroup.com

http://www.bspmediagroup.com

Evolving VAS strategies in a data

environment: Market overview and

forecast

Thecla Mbongue

Senior Research Analyst – Africa

Informa Telecoms & Media

www.informatandm.com

© Informa UK Limited 2013. All rights reserved

Africa Com Masterclass

Cape Town, 12 November 2013

Agenda


© Informa UK Limited 2012. All rights

reserved

About ITM

Mobile data KPIs

Key segments

Recommendations

About Informa Telecoms & Media We are the leading provider of insight , events and training to the global telecoms and media community

50 million 220



http://www.informatandm.com/wbis

http://www.informatandm.com/wcis

http://www.informatandm.com/wtvis

http://www.informatandm.com/ic

About Informa Telecoms & Media

Agenda



reserved

About ITM

Mobile data KPIs

Key segments

recommendations

6

Messaging 59.4% Mobile

Payments/Banking

12.8%

Internet 7.3%

Applications 4.3%

Music 4.2%

Social Networking

3.9%

Games 2.8%

Others 5.3%

Mobile data users by segment (million) – end-2013 forecasts

• 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

KPIs - mobile data usage in Africa



7

• 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

KPIs Pan-African groups



MTN 50

Vodacom 21 Airtel

18 Millicom

13 Orange (SSA)

5

Total data users

MTN 13

Safaricom Kenya 11.6

Orange 7.5

Vodacom 5.8

Millicom 3.7

Airtel 1.8

MFS users – 3Q13

8

KPIs Pan-African groups



Data - other 886

SMS 275

MFS 29

VAS 10

MTN group data revenues split (US$ million)– 1H13

Data - other 601

Messaging 163

Vodacom group data revenues split (US$ million)– 1H14 (6 months to Sep-13)

VAS - other 28 Internet access

26 MFS 26

SMS 12

Millicom Africa data revenues split (US$ million)– 1H13

Messaging + VAS 192

Data - other 144

Airtel Africa data revenues split (US$ million)– 1H13

Agenda



reserved

About ITM

Mobile data KPIs

Key segments

Recommendations

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.

0

200

400

600

800

2013 2014 2015 2016 2017 2018

Mill

ion

s

Mobile broadband subscriptions forecast – Africa, 2013 - 2018

LTE

1xEV-DO

HSPA

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

0

50

100

150

200

Egypt Nigeria South Africa Kenya Rest of Africa

Mill

ion

s Smartphone usage forecast in Africa, 2013 -2018

2013 2018

• 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.

•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.

10/07/13 www.informatandm.com


14

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.

• 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.

Handsets financing deals on Vodacom’s network,

Sep12 – Sep13




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)

Schools Utility

companies Entertainment

industry Financial

institutions

Mauritius: tax collection

DRC: payment of police and army

officers

Various countries: school fees. Latest

partnership include Moov and University

of Togo Various countries: Payment of bills

(electricity, water). M2M for metering

services

Various countries: M2M for POS terminals, ATM services

for cash out, international remittances (Western

Union…), insurance, stock exchange.

Various countries: Satellite TV,

restaurants, ticketing.

Effective data pricing: dedicated OTT price plans



17

Airtel WhasApp data bundle

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.

• 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.

Effective data pricing: carrier billing to boost app

store downloads



18

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.



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



reserved

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.

Local does not only refers to culture or ethnicity

Recommendations

16/10/12 www.informatandm.com 21

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

Thank you

Questions?


The contents of this publication are protected by international copyright laws, database rights and other intellectual property rights. The

owner of these rights is Informa UK Limited, our affiliates or other third party licensors. All product and company names and logos

contained within or appearing on this publication are the trade marks, service marks or trading names of their respective owners, including

Informa UK Limited. This publication may not be:

(a) copied or reproduced; or

(b) lent, resold, hired out or otherwise circulated in any way or form without the prior permission of Informa UK Limited.

Whilst reasonable efforts have been made to ensure that the information and content of this publication was correct as at the date of first

publication, neither Informa UK Limited nor any person engaged or employed by Informa UK Limited accepts any liability for any errors,

omissions or other inaccuracies.

Readers should independently verify any facts and figures as no liability can be accepted in this regard - readers assume full responsibility

and risk accordingly for their use of such information and content.

Any views and/or opinions expressed in this publication by individual authors or contributors are their personal views and/or opinions and

do not necessarily reflect the views and/or opinions of Informa UK Limited.

Technology

Evolving VAS strategies in a data environment: Market overview and forecast