10 Challenges For Mobile Operators In Sub-Saharan Africa To Negotiate

By Peter Pedroncelli AFKI Original Published: September 4, 2017, 1:03 pm
Mobile operators - Africa set to be the fastest growing mobile userbase in the coming years. Photo - Answers AfricaAfrica set to be the fastest growing mobile userbase in the coming years. Photo - Answers Africa

Mobile operators in sub-Saharan Africa have a unique set of challenges that they face in the region, but if they manage to overcome these obstacles, success awaits.

Sub-Saharan Africa is home to many mobile operators who have dominated their markets, from Vodacom in South Africa to Safaricom in Kenya, but that dominance has not come easy.

Now a fresh set of issues stand in the way of further success on the continent, but these telecoms companies are gearing up to take on increased competition, pricing issues, regulations and all of the other sticking points disrupting profitability and continued development.

Here are 10 challenges for mobile operators in sub-Saharan Africa to negotiate.

Sources: ITWebAfrica, Fin24, OAfrica, InfoVista, PiranPartners.

Most Admired Global Tech Brands According To Africans

Africans continue to use more and more data. Photo: mtn.co.rw

The data growth challenge

The volume of data used has increased exponentially due to demand, but data revenue is not rising as fast, because mobile operators have not yet found the best and most innovative data pricing solutions. On top of that, more investment is consistently required in order to meet ever-increasing data usage.

Apps such as Facebook keep users interested. (Photo: Facebook)

Lack of ownership of content

Instead of benefiting from the revenue that comes with the use of content that customers are using on mobile platforms, operators only see minimal revenue from the data used. Mobile operators in Africa therefore need to develop and monetize content, apps and services that their users will enjoy and subscribe to.

Competitor mobile operators keep each other under pressure. Image: businesstech.co.za

More intense competition

Competition between rival mobile operators and disruptive influence from over-the-top content providers is beginning to build in most sub-Saharan African markets, which in turn produces less revenue. The operators who are going to thrive need to look at the competitive landscape and consider where their opportunities lie.

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Opening up new revenue streams such as mobile money is a good way to secure the future for mobile operators. Photo: afritorial.com

The move to additional revenue streams

According to a GSMA report, ‘The Mobile Economy Africa 2016’, revenue growth rates for African mobile operators – which were above 3.8 percent at 53.5 billion in 2015 – will slow down in the next five years, highlighting the need for these companies to move away from focusing on voice and text along and build other revenue streams such as data, mobile money and online services.

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Operators such as MTN have seen profits decline. Photo: Nadine Hutton/Getty

Profitability is on the decline

Mobile operators need to embrace to lower margins in order to survive. Stats show that the margin of earnings before interest, tax, depreciation and amortization is declining, from around 38 percent in 2006 for 93 African operators, to 31 percent in 2016. Factors such as price wars, inability to contain costs, and necessary infrastructure investments have had this effect.

Developing intuitive regulation is a step in the right direction. Photo: 1africa.tv

Unpredictable regulation

Regulation can be somewhat unpredictable and problematic in certain countries. Regulation influences the evolution of the telecommunications industry and directly affects revenue generation for operators through elements such as taxation and ICT development policies. These policies need to be developed proactively and with all stakeholders in mind.

share acquisition - 160232989 Vodacom billboard in Johannesburg. Photo: Nadine Hutton/Bloomberg/Getty

Operators such as Vodacom need to keep prices reasonable for the sake of customer retention. Photo: Nadine Hutton/Bloomberg/Getty

Pricing issues

Price wars between competitors have put operators under pressure, reducing revenues and margins for these telecoms companies. One of the biggest customer complaints across the continent remains pricing, and the pressure to consistently innovate to keep customers happy with pricing models, effective tariff rate control and simplicity is weighing on operators.

The FNB banking mobile app is now zero-rated. Photo - CompareGuru

Keeping customers happy to keep them loyal. Photo – CompareGuru

Improving customer experience

Customer bases are under threat, and it appears easier than ever for users to be able to jump ship to competitors, which is why operators need to be fully focused on improving individual customer experience in order to keep customers happy. Making the customer feel unique and providing them with an incomparable experience will help to generate more value and keep them loyal.

Telecommunications Lab

Safaricom are investing in a telecommunications lab to ensure the future of the company. Image: twitter.com

The big data challenge

The challenge that lies in store for all mobile operators on a global scale is that of effectively converting information of all kinds into insights and action. Many telecoms companies are overwhelmed by the volume of data (such as user info) that is available to then, and become unable to extract the full value from the priceless information.

Africa set to be the fastest growing mobile userbase in the coming years. Photo - Answers Africa

Africa set to be the fastest growing mobile userbase in the coming years. Photo – Answers Africa

Creating new business models

As the telecoms industry continues to evolve, operators need to react by building new business models adapted to the new context of the industry and the users they serve, allowing them to generate value and remain profitable.

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