WhatsApp, Facebook a threat to voice revenue

Tuesday July 25 2017

Third-party instant messaging services or over-the-top (OTT) platforms such as WhatsApp, Viber and Facebook Messenger are eating into the revenues of mobile phone companies in sub-Saharan Africa. FOTOSEARCH

By Allan Olingo

Third-party instant messaging services or over-the-top (OTT) platforms such as WhatsApp, Viber and Facebook Messenger are eating into the revenues of mobile phone companies in sub-Saharan Africa.

The decline in revenues has been particularly visible over the past four years, with communications firms shifting to data and money segments to drive earnings and profits, rather than the traditional voice and short messaging services (SMS) segment.

A new mobile economy report by the GSM Association (GSMA) — a trade body that represents the interests of mobile operators worldwide — notes that revenue growth among telcos will remain subdued for the remainder of this decade as subscribers shift to alternative communication platforms.

“With traditional voice and messaging services accounting for more than 70 per cent of service revenues for many operators in the region, this trend is expected to weigh heavily on overall revenue growth for the foreseeable future,” the report notes.

According to the report, alternative platforms are fuelled by rising mobile broadband penetration rates.

“We found that up to 90 per cent of smartphone users in Nigeria, South Africa and Tanzania use at least one IP [Internet Protocol] messaging services such as WhatsApp, BBM or Facebook Messenger regularly.


"This is already having a material impact on revenue growth, with declining contribution from traditional voice and messaging services,” the report notes.

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In its 2017 Telecommunications Trends report, consulting firm PwC notes that OTT players like WhatsApp, Viber and Apple’s iMessage already represent more than 80 per cent of all messaging traffic, and Skype alone accounts for more than a third of all international voice traffic minutes.

“As a result, many telecom carriers are facing significant decreases in their basic communication service revenues: Drop-offs of as much as 30 per cent in SMS messaging, 20 per cent in international voice and 15 per cent in roaming,” said Bahjat El-Darwiche, a partner at PWC.

In May while releasing it’s full-year results, East Africa’s leading telecommunication firm Safaricom reported a 27.1 per cent jump in net profits to $484 million, with voice call revenues increasing marginally.

“Despite voice and SMS services continuing to contribute more to our bottom line in absolute terms, we now expect mobile data and value-added services to be our answer to growth,” said Safaricom CEO Bob Collymore.

The firm’s mobile data revenue surged 38.5 per cent to $292.9 million, while voice revenue rose 2.9 per cent to $934.6 million. The firm’s customer base rose by 11.8 per cent to 28.1 million subscribers.

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Tanzania also witnessed a drop in voice traffic, attributed to the increasing use of OTT services.

Incoming international calls dropped to 171.3 million minutes last year, from 221.1 million minutes in 2015, data from the Tanzania Communication Regulatory Authority shows.

Outgoing international calls dropped to 149.5 million minutes from 219.4 million minutes. The country’s mobile data users rose to 18 million, from 16.2 million subscribers in 2015.

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There has been a debate on whether to block OTT services, with some telecommunications firms saying such a move would be counterproductive.

Kenya’s Information and Communication Cabinet Secretary Joe Mucheru told The EastAfrican that the country is yet to come up with a policy to regulate these services.

“We are still in discussions on how best to regulate OTT service providers in a way that will see us adopt a win-win scenario for all,” he said.

In South Africa, a parliamentary committee on telecommunications last year toyed with the idea of a possible regulation of OTT services, something operators like MTN and Vodacom, that have a presence in East Africa supported.

The Nigerian Communications Authority last year also admitted that the OTT service providers were watering down telcos’ investments in voice infrastructure.

Zimbabwe and Ghana have also turned down their respective telecoms’ requests to regulate OTT services.

READ: Telecoms call for African govts to update regulations