Although Africa’s largest telco operators are generally showing growth in their customer bases, revenue growth has somewhat stalled to as little as 1% year-on-year, says Mariam Abdullahi, Telco Industry Lead at SAP Africa.
This means that despite attracting an increased number of customers, the amount each of these customers spend is decreasing.
“In the wake of digitally transforming economies, it is safe to assume that the traditional revenue models of voice, SMS and data revenues are eroding and may soon become irrelevant,” Abdullahi explained.
In a statement issued on 11 December, 2017, Abdullahi said that thanks to a combination of maturing technology, regulatory interventions, increasing levels of sophistication and discernment among consumers, the disruption brought by free or low-cost public Wi-Fi and Over-the-Top (OTT) powerhouses such as WhatsApp, traditional telco revenue streams are under severe threat.
SAP Africa research has found that WhatsApp and its more than 900 million active users around the world, leverage telco infrastructure to send 30 billion messages per day at no cost.
“Google’s ever-expanding fibre network in the US is enabling an always-online lifestyle, while China’s WeChat not only connects its 600 million subscribers with instant messaging, but has also established itself as a digital platform providing services ranging from real time traffic updates to mobile payments,” said Abdullahi.
She stated that these OTT players have created loyal customer bases as they provide valuable services at low costs, all leveraging the infrastructure that Telcos built.
“I would argue that a far better route to the continued success and growth of the African telco industry is not to look back at missed opportunities, but to rather look ahead to the emerging technologies that will shape the business and consumer landscape across the African continent. And there’s no bigger or better emerging opportunity than the Internet of Things (IoT),” stated Abdullahi.
With a projected 50 billion things connected by 2020, the Internet of Things is set to become one of the most significant technological innovations in history. General Electric estimates that investment into the industrial Internet of Things will reach $60 trillion over the next 15 years.
Zimabwe’s Econet, for instance, works with trucking companies by leveraging IoT to collect information for insurance companies.
Abdullahi added that telcos should look specifically at implementing an innovation strategy that highlights how the telco wants to take advantage of emerging technologies such as IoT; an understanding of the business models that would best support their customers’ objectives and approach to business; an accurate and central system of records; and a team of experts to ensure all components in the innovation engine work together seamlessly and effectively.