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Africa Mobile Revenues Are Declining – Operators to Focus on Data, Video

06 October, 2013
 
ICT Africa
October, 213

Whether you are an entrepreneur looking into establishing a new ICT business in Africa or an established operator running a mobile or fixed line network, voice is no longer a recommended primary source of revenue. While Africa celebrates the rapid increase in mobile subscriptions (over 30% CAGR over the past 8 years) the average revenue per user (ARPU) is dwindling and it is no longer possible to run a viable business primarily on voice.

Like any other product or service which goes through a number of lifecycle stages, including maturity and decline, voice services in Africa have long gone past the maturity stage and are now in the decline stage. The figure below shows that Africa mobile ARPU has been declining by 14% per year since 2004. This should come across as a stern warning to African operators and other entrepreneurs wishing to venture into ICT businesses in Africa to look beyond voice services.

Africa Mobile ARPU Declining

The decline of voice revenues is not just an African phenomenon; it has long since been experienced elsewhere in the world. However, operators throughout the wold have introduced a rich mix of high revenue generating services, including data, video and other value added services to make up for the declining voice revenues. The figure below shows the decline of mobile voice ARPU and growing data ARPU in the USA. More operators in the world are focusing more on data than voice for their revenue generation.

Africa Mobile ARPU Declining

But sadly, according to Budde Research, Mobile operators in Africa make up to 70% of their revenue from voice. It is perilous for any operator in Africa to be holding on to voice as a main source of their revenue. Those who fail to move quickly to include data, video and other value added services in their offerings are bound to be relegated.

We are cognisant of the challenges African operators face when considering offering more data services. These include the poor quality of service as discussed in our NigeriaCom Video. While Africa can now boast of over 700 Million mobile lines, most of them are not data cable. It is imperative that operators do whatever it takes to address the QoS issue and quickly offer more data, video and other services.


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