African Data Prices Falling, Income Rising

African Data Prices Falling, Income Rising

Data is increasingly helping African mobile companies absorb the impact of revenue losses from declining voice services category, ITWebAfrica reported.

Zimbabwen telecom Econet reported on Tuesday a 14 percent decline in revenue for the year ending in February, but revenue from data jumped by 18 percent and income from data services grew from $103 million US to US$113 million.

“Had we not invested in data, today we would be seeing a company that’s half the size we have today,” said Econet Wireless CEO Douglas Mboweni.

Africa’s mobile Internet market has grown steadily over the last decade and new forecasts show mobile data revenue will double over the five years to 2019—topping $22 billion, according to Quartz. Mobile voice revenue, by comparison, is expected to grow by 10 percent in the same period.  Mobile voice revenue is still significantly higher than data revenue, at $50 billion in 2014.

Over the last month, Nigeria’s leading mobile operators have announced cuts in mobile
data prices, made possible by the deregulation by the
Nigerian Communications Commission in October when it removed a data
floor price, leaving telcoms to set prices as low as possible.

Nigerian Internet users are ecstatic

“A few days ago, 3,000 naira ($15.06 US) would have gotten you 6GB of Internet data on Globacom’s network. Today, that will fetch you 12GB,” said tech editor David Adeleke in Techpoint.NG. “That is insanely cool. A month ago, 3,500 naira ($17.57) was enough to buy 4GB on the Airtel network; now it’ll buy 7GB.”

Both MTN and Etisalat have also revised their data plans in a bid to compete on this front, Techpoint reported.

At Zimbabwe’s Econet, overall revenue declined by 14 percent to $641 million US. Mobile money subscribers remained strong during the one-year period. The company will focus on mobile money and data to broaden its revenue streams and make up for voice, said Econet Finance Director Roy Chimanikire, ITWebAfrica reported.

With 92 million subscribers, Nigeria is Africa’s No. 1 mobile market. The race for more mobile Internet users is shifting telcom marketing strategies away from voice minutes to data packages, Quartz reported.

It was inevitable that the Nigerian market followed trends in the U.S. and Europe with data eventually becoming a more valuable proposition for mobile operators than voice. But cheaper mobile data is likely to have a far more significant impact in a country with very low fixed line broadband Internet penetration.

There’s also a theory that the sharp drop in data prices has also been prompted by increased competition between Internet cable companies in Nigeria. “Wholesale data has gotten cheaper thanks to the competition among submarine cable companies,” says Ismaila Sanusi, a Nigerian tech blogger, Quartz reported. “At some point, the only options for getting Internet data in and out of the country was the West Africa Submarine Cable or a pricey direct satellite link. Now you’ve got other options alongside the old ones all jostling for customers.”

Just 43 percent of the world can afford 500 megabytes per month, according to a PwC report. Mobile data prices need to drop significantly. The hope is that the trend catches on in other African countries.

For consumers, cheaper data plans means they can consume more digital content than before. For content producers, it means access to more customers and more potential revenue, Adeleke said in Techpoint:

But with the access to more content and the opportunity for more content producers to create, there will also arise the need for consumers to control and determine what they consume. Information overload is not fun.

There’s much to look forward to, and I’m excited about to be a part of it.