The growing importance of social media platforms and apps as well as Internet voice applications has hit telecommunications firms hard, claiming a chunk of their revenue, OZIOMA UBABUKOH writes
The telecommunications industry in Nigeria, Africa’s largest economy, is projected to lose a total of N109tn ($386bn) in voice revenue to the growing usage of Over-the-Top Internet voice applications by 2018.
United Kingdom-based research and analytics company, Ovum, stated in a report that “the $386bn loss will accrue over a period of six years – between 2012 and 2018 – from Nigerian customers using OTT voice applications.”
Checks by The PUNCH show that the increasing rise of the OTT players who provide voice and Short Message Services, or apps such as WhatsApp, Skype, Facebook, BlackBerry Messenger and Viber, is currently eating deep into the voice revenue of telecommunications companies in the country by more than 50 per cent.
The impact of these new services is further explained in a report by Credit Suisse.
In the report, the multinational financial services company said, “Proliferation of Over-the-Top content services such as Skype and WhatsApp, among others, could trigger more than a whopping 50 per cent revenue hit on Nigerian telecoms companies’ voice services in the coming months.”
A report by the Nigerian Communications Commission also indicated that the OTT could be a threat to traditional telecoms model by licensed operators.
“To further worsen this issue, the traditional operators still have to make significant investments in upgrading their networks to handle the increasing volume of data generated by the same providers of OTT services,” the NCC report read in part.
The Executive Vice Chairman, NCC, Prof. Umaru Danbatta, at a forum with telecoms operators recently, ruled out licensing OTT, thereby foreclosing its regulation.
However, findings by our correspondent showed that the monthly revenue accruing to the telecoms operators from the provision of voice services to the owners of the over 151 million mobile telephone lines witnessed an estimated 31 per cent crash in six months.
According to findings, the aggregate voice revenue by the operators, including the Global System for Mobile Communications, Code Division Multiple Access and fixed networks fell from N241.6bn in December of 2015 to N166.4bn in June.
Experts say the OTT trend and the declining Average Revenue Per User occasioned by subscribers’ low purchasing power in the face of increasing cost of operations is responsible for the fall in operators revenue.
“Reduction in the ARPU has been partly traced to the emergence of the Over-the-Top players, which operators said are eating into their profitability potential,” the President, Association of Licensed Telecoms Operators of Nigeria, Mr. Gbenga Adebayo, said in an interview.
Analysts told our correspondent that while telecoms companies in Nigeria had become wary of the effect of such OTT platforms, the revenue loss was only going to get worse.
This was also the position of the Commonwealth Telecommunications Organisation at its OTT conference in London last month, where it said it was conducting a research into the dynamics that could stop the trend.
“The CTO’s plan is to carry out a study to understand the market dynamics and policy and regulatory challenges of Over-The-Top services, both in the context of their impact on traditional business models and of opportunities for innovation and stimulating economic growth,” it stated.
At the same time, major operators such MTN, Globacom, Airtel and Etisalat in the country’s $38bn telecoms market said they were also struggling to counter a trend in which the prices of basic voice and data services were declining.
MTN Nigeria said that OTT content services had a “cannibalising effect” on network operators’ voice and data revenue, because they provide “free” services, which duplicate services already provided by network operators such as voice calls and
The telecommunications industry in Nigeria, Africa’s largest economy, is projected to lose a total of N109tn ($386bn) in voice revenue to the growing usage of Over-the-Top Internet voice applications by 2018.
United Kingdom-based research and analytics company, Ovum, stated in a report that “the $386bn loss will accrue over a period of six years – between 2012 and 2018 – from Nigerian customers using OTT voice applications.”
Checks by The PUNCH show that the increasing rise of the OTT players who provide voice and Short Message Services, or apps such as WhatsApp, Skype, Facebook, BlackBerry Messenger and Viber, is currently eating deep into the voice revenue of telecommunications companies in the country by more than 50 per cent.
The impact of these new services is further explained in a report by Credit Suisse.
In the report, the multinational financial services company said, “Proliferation of Over-the-Top content services such as Skype and WhatsApp, among others, could trigger more than a whopping 50 per cent revenue hit on Nigerian telecoms companies’ voice services in the coming months.”
A report by the Nigerian Communications Commission also indicated that the OTT could be a threat to traditional telecoms model by licensed operators.
“To further worsen this issue, the traditional operators still have to make significant investments in upgrading their networks to handle the increasing volume of data generated by the same providers of OTT services,” the NCC report read in part.
The Executive Vice Chairman, NCC, Prof. Umaru Danbatta, at a forum with telecoms operators recently, ruled out licensing OTT, thereby foreclosing its regulation.
However, findings by our correspondent showed that the monthly revenue accruing to the telecoms operators from the provision of voice services to the owners of the over 151 million mobile telephone lines witnessed an estimated 31 per cent crash in six months.
According to findings, the aggregate voice revenue by the operators, including the Global System for Mobile Communications, Code Division Multiple Access and fixed networks fell from N241.6bn in December of 2015 to N166.4bn in June.
Experts say the OTT trend and the declining Average Revenue Per User occasioned by subscribers’ low purchasing power in the face of increasing cost of operations is responsible for the fall in operators revenue.
“Reduction in the ARPU has been partly traced to the emergence of the Over-the-Top players, which operators said are eating into their profitability potential,” the President, Association of Licensed Telecoms Operators of Nigeria, Mr. Gbenga Adebayo, said in an interview.
Analysts told our correspondent that while telecoms companies in Nigeria had become wary of the effect of such OTT platforms, the revenue loss was only going to get worse.
This was also the position of the Commonwealth Telecommunications Organisation at its OTT conference in London last month, where it said it was conducting a research into the dynamics that could stop the trend.
“The CTO’s plan is to carry out a study to understand the market dynamics and policy and regulatory challenges of Over-The-Top services, both in the context of their impact on traditional business models and of opportunities for innovation and stimulating economic growth,” it stated.
At the same time, major operators such MTN, Globacom, Airtel and Etisalat in the country’s $38bn telecoms market said they were also struggling to counter a trend in which the prices of basic voice and data services were declining.
MTN Nigeria said that OTT content services had a “cannibalising effect” on network operators’ voice and data revenue, because they provide “free” services, which duplicate services already provided by network operators such as voice calls and
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