What next?

Much of the discussion at AfricaCom 2011 in Cape Town centred on the imminent threat of flattened service revenues, and the opportunities available to resuscitate such through innovative data offerings. The role of Internet players and over-the-top (OTT ) providers is being viewed by telcos with a measure of suspicion as well as that of envy, as traditional players look to formulate new business models

Etisalat Nigeria’s Steven Evans (centre) says operators have been looking to launch new services while at the same time improving their operational efficiencies wherever possible

Etisalat’s plight in Nigeria mirrors that of many of the service providers across the content – a need to maintain revenue growth in a highly competitive market, while at the same time looking to operate more efficiently and manage costs better.

Etisalat Nigeria launched commercially in October 2008 and according to the company’s CEO Steven Evans, it counted 9.8 million subscribers as of October 2011. The cellco employs around 1,300 staff and by the end of 2011 is looking to have 3,000 base stations in place. It has been EBIT DA positive since the second half of 2011.

“There has been a 6-7 month hiatus due to the requirement for SIMS to be registered,” Steven Evans, CEO of Etisalat said while speaking at AfricaCom 2011 in Cape Town in the middle of November. “There are currently around 80 million active SIM s in the market place and we are effectively the fourth entrant.”

Nigeria’s telecom regulator, the Nigerian Communications Commission (NCC ), began the SIM registration exercise in April with a view to closing it on September 28, 2011, six months after it began. An extension window has since been discussed, and the NCC is currently harmonising the results of the exercise with those of telecom operators in order to have a single database of telephone and Internet users in the country.

Given the vibrant competitive activity in the market, operators have been looking to launch new services while at the same time improving their operational efficiencies wherever possible. Etisalat for example has introduced DotMe, which permits subscribers to choose their number and has also launched a HomeZone service, allowing subscribers to set any location of their choice as their HomeZone and then going on to enjoy discounted calls every time they make a call from that zone.

“We also have CAPEX and OPEX reduction initiatives in place and these extend to activities such as tower sale and lease back, co-location, hybrid power, as well as transmission sharing,” Evans said. Commercially,

the operator has been working on its retail outlet formats as well as over-the-air (OTA ) recharging formats in order to streamline operations further.

In the Nigerian telecom context, it is clear that the CDMA businesses are ahead of the GSM players with respect to the tower sales and leaseback model, and Evans believe much can be learned from it. In August for example, Nigerian CDMA network operator, Visafone Communications agreed to sell and lease back 459 towers to infrastructure operator IHS Nigeria for an undisclosed amount.

The investment deal allowed IHS to further grow its portfolio of towers, and upon signing the agreement with Visafone, its second sale and lease back transaction, IHS CEO Issam Darwish, confirmed the company’s vision for further growth.

“We aim to become one of the leading pan-African telecom infrastructure solutions providers, and following this successful agreement we plan to further increase our Nigerian tower base to over 1,000 sites by the end of the year,” he said.

IHS is also the largest managed services provider in sub-Saharan Africa, with more than 3,500 sites under management.

“The plan is not to go as far as radio network (RAN ) sharing, but to consider the sharing of passive elements in the network, as well as colocation,” Evans described. Aside from the traditional challenges and opportunities within the telecom space, much discussion at AfricaCom 2011 also related to the runaway success of social media and social networks, and how best service providers could leverage and monetise that success. In South Africa for example, Facebook is said to be currently adding around 100,000 new subscribers a month.

Home-grown South African social networking sites such as MXit and 2Go are adding 40,000 and 30,000 new subscribers per month respectively, displaying the potential of locally-developed platforms and applications.

Vodacom continues to invest in its Vodacom live! portal, which it claims to be the most significant portal in South Africa with six million unique visitors a year

MXit allows users to send and receive one-on-one text and multimedia messages to and from other users, and in general chat rooms. MXit also supports gateways to other instant messaging platforms such as MSN Messenger, IC Q and Google Talk, and does not charge for one-on-one messages though mobile operators may charge for data usage. There are also a number of pay-services, including chatrooms.

The instant messaging (IM ) qualities of platforms such as MXit can be viewed as a potential revenue leakage from service providers’ messaging businesses, and while service providers do benefit from increased data and access usage, they do not get to participate fully in the premiums being enjoyed by the OTT social network players.

Thus the potential for branding and developing a strong following behind a social network, which then has communications elements within its functionality is significant, and justifiably making service providers somewhat nervous. Guinness Nigeria, for example, is one of the country’s most visible and celebrated brands. It commands one million subscribers on its social network platform alone, which is a quarter of the number of all Facebook subscribers in the country.

Despite the success of social networking having clearly evolved from the Internet, some telecom operators continue to try to exercise as much control over social interactions with their subscriber bases as possible. Vodacom continues to invest in its Vodacom live! portal, which it claims to be the most significant portal in South Africa with six million unique visitors a year.

“We launched our apps store on September 1, 2011, and had 140,000 free apps available at that time,” Prins Mhlanga, Vodacom’s managing executive of Digital Media said. “We want to keep things as open as possible and work with other platforms such as Java, BlackBerry, Symbian, Windows Mobile and Android,” he added.

In the middle of December the cellco announced the launch of premium apps in the Vodacom App Store. The premium apps range from ZAR 5 (US$0.62) to ZAR 50.

The Vodacom App Store counted over five thousand premium apps that have been added to the Vodacom App Store since launch.

“The customer uptake of free apps was fantastic with over 500,000 downloads in the first three months of launch. We believe the market is ready to experience premium apps,” Mhlanga said at the announcement of premium apps.

Many industry commentators still regard operator-developed portals such as Vodacom live! as widely unsuccessful.