Telcos’ monthly voice revenue falls by 31%

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Monthly revenue that accrued to Nigeria’s telecoms operators from the provision of voice services to their over 151 million subscribers has witnessed a dramatic crash by an estimated 31 per cent in one month, New Telegraph investigations have shown.

From N241.6 billion in December last year, aggregate voice revenue by the operators including the Global System for Mobile Communications (GSM), Code Division Multiple Access (CDMA) and fixed networks fell to N166.4 billion in January.

The decline, representing N75.2 billion revenue losses, is equivalent to 31.1 per cent fall in their income accrual. The figures, which represent the amount of money spent by telecoms subscribers in making calls on their respective networks, also represent the revenue generated by the telcos.

The findings were arrived at, using the current active mobile subscriptions in the country and the subsisting Average Revenue Per User (ARPU) for Nigeria multiplied by the number of subscriber base per month.

ARPU is the financial performance benchmark in the telecoms industry that measures the average monthly revenue generated by operators from telecoms subscribers, usually monthly. According to data released by industry leading operators, ARPU in Nigeria’s telecoms market is estimated at around N1,100. In the last quarter of December 2015, ARPU had stood at around N1,600 but crashed in the first quarter of this year to N1,100, indicating reduction in revenue accrued to telecoms networks.

According to this newspaper’s investigation, by multiplying the total active subscription base of 151 million by an APRU of N1,600, the operators’ revenue stood at an estimated N241.6 million.

However, by the time the telecoms industry regulator, the Nigerian Communications Commission (NCC), released the January 2016 subscriber data, which is the latest in the industry, the number of active subscribers had moved slightly to 151.1 million but APRU declined by close to 10 per cent.

While the subscriber base had reached its highest point in November with over 152 million subscriptions, the regulatory directive handed down to MTN to deactivate unregistered Subscriber Identification Module (SIM) cards on its network resulted to decline in subscriber base in the face of dwindling ARPU and increasing cost of service roll out by the operators.

Earlier in January 2015, when active telecoms subscriber base stood at 140.8 million, subscriber phone service bill was estimated at N225.2 billion going by the APRU of N1, 600 then. The figure increased to N228 billion in February when subscriber base jumped to 142.5 million.

In March, April, May and June, when subscribers on all telecoms networks stood at 143.9 million; 145.4 million; 146.5 million and 148.7 million, the value of subscriber phone bills were N230.2 billion; N232.6 million; N234.4 billion and N237.9 billion respectively.

Also in July, with active subscriptions on telecoms networks standing at 150.7 million, total estimated spending from household income by telecoms users was N241.1 billion while the bill hit N241.6 billion; N240 billion and N243 billion when active mobile subscriptions reached 151 million, 150 million and 152 million in August, September and October in that order.

With the releases of November and December 2015 subscriber base, which pegged subscriber bases for the two months 152.1 million and 151 million, the phone bills stood at N243.3 billion and N241.6 billion respectively.

President, Association of Licensed Telecoms Operators of Nigeria (ALTON), Mr. Gbenga Adebayo, said while mobile subscriptions were expected to surge once MTN is able to absorb all its deactivated subscribers back on its network, stronger intervention is required from the government to address the issue of vandalism, high cost of deployment and multiple taxations, which all have increased operators’ capital expenditure (CAPEX) and operating expenditure (OPEX).

According to analysts, reduction in ARPU has been partly traced to the emergence of the Over the Top (OTT) players, which operators said were eating into their profitability potential.

OTT services are services carried over the networks, delivering value to customers, but without any carrier service provider being involved in planning, selling, provisioning, or servicing them; thereby implying that traditional telcos cannot directly earn revenue from such services.

Already, industry analysts say that OTT is a service-based on the Voice over IP communication protocol (VoIP), a disruptive technology that is rapidly gaining ground against traditional telephone network technologies.

According to a report by the NCC on the activity of OTT in Nigeria, with the increase in uptake of mobile VoIP services provided by apps such as Google, Facebook, Skype, Viber, WhatsApp, among others, telecoms operators “face the risk of eroding revenues and profitability.”

The report noted: “Many traditional telecom service providers are of the opinion that traditional telephony and SMS revenues are under threat from newer, IP based alternatives like WhatsApp, Skype, Viber, among others.”

Similarly, the report said that third party web content and social networking companies such as Google and Facebook were increasingly generating huge revenues and driving high levels of data traffic, which ride on the broadband networks of traditional telecom 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.

“Most traditional telephone network service providers, therefore, argue that unless there is a revenue flow to them from such services, they do not have an incentive to continue to maintain or upgrade the networks,” the report said

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