Voice remains king, contributes $7.3bn of telcos Revenue

The mobile voice segment of the Nigeria’s telecommunications industry still rules the air waves, as it is the largest revenue contributor to operators’ bottomline in the country.

Voice services contributed $7.3 billion out of a total sum of $9.8 billion generated by the telecoms industry in 2014, bringing in a percent increase of 6.8 or $219 million, more revenue than in the previous year, according to Pyramid Research.

 

Industry observers are of the view that voice remains a critical part of the success story of the mobile boom in Nigeria, stating that it was not likely to abate soon, even as data and Internet service needs began to kick in.

They held that amidst conscious efforts by telecommunications companies to open up a fresh revenue stream in the delivery of data services, voice oriented services would remain the leaders in the industry for years to come. 

“In Nigeria, voice is still growing very fast, along with data and Internet access, so we are still in the early stages of development of digital services, but access to the Internet is very important for Nigerian customers,” said Matthew Wilsher, chief executive officer, Etisalat Nigeria.

Mobile data and pay-TV, on the other hand, are expected to grow at Compound Annual Growth Rates (CAGRs) of 16.0 percent and 5.2 percent respectively, between 2014 and 2019  to reach $3.8 billion and $647 million. For United Arab Emirate’s (UAE’s) Etisalat Nigeria, revenue from data services is currently over 20 percent.

“In 2014, our non-voice revenues, including data, Enterprise Business, Value Added Services(VAS), digital services, contributed approximately 20 percent to our total revenues”, said Funmi Onajide, general manager, corporate affairs, MTN, the nation’s largest mobile operator, with about 60 million subscribers.

In view of the growing demand for mobile data and Pay-TV services, especially amongst the youth population, industry analysts at Pyramid Research said South Africa’s MTN and India’s Airtel were currently ramping up investments in  Third Generation (3G) and fibre networks to put them in pole position to deliver unmatched data and Internet experience to their teeming subscribers. 

  “We currently have 3,000 Third Generation sites throughout the country, and we look to continue to invest in our data internet network, in order to enable us meet the communications needs of our customers,” said Maurice Newa, chief commercial officer, Airtel Nigeria.

Adoption of 3G technologies was at 15.9 percent of the mobile subscription base in 2014. Analysts at Pyramid project said this would probably increase to 32.6 percent by year-end 2019, owing to increased focus on 3G by MTN, Globacom and Airtel. 

Long Term Evolution (LTE) subscriptions is expected to reach 8.1 million by year-end 2019, or 4.5 percent of total mobile subscriptions, as the Nigerian Communications Commission (NCC) plans to release fresh spectrum in 2015, with a number of operators already expressing interest in the opportunity.

But for the second time, the NCC has postponed the proposed auctioning of the 2.6 gigahertz spectrum band ‘till further notice’, a situation that is frustrating the business plans of investors seeking to play critical roles in Nigeria’s broadband market.

According to industry watchers, the continuous postponement of the spectrum auction could threaten the country’s target of achieving 30 percent broadband penetration by 2018. Experts said widespread broadband availability would facilitate greater adoption of advanced online services, such as, e-governance, e-health, e-education, e-commerce and telemedicine. It would also enable Nigerians employ themselves on the back of the myriad  opportunities availed by the internet. It would allow skilled Diaspora Nigerians contribute to national development. Beyond that, industry watchers say broadband would lower the cost of real estate as people would be able to work from anywhere, without necessarily converging in urban areas and needing to commute.

The GSM Association, a lobby group protecting the interest of operators globally, in a recent report, encouraged Nigeria “to licence the 2.6GHz spectrum band using a clear spectrum structure to stimulate affordable and better mobile broadband services across the length and breadth of the nation.

Ben Uzor