Whatsapp, other OTTs slash 81% of operators’ revenue in 13 years

•MTN’s Q1 revenue hit N81.4 billion
Operations of the Over the top (OTT) players, including WhatsApp, WeChat, Viper, Skype, Google, have slashed about $17.8 (81%) from the Average Revenue per User (ARPU) of the Mobile Network Operators in the country within the last 13 years.

ARPU, which was around $22 in 2005, has dropped by 81 per cent to $4.14 as at April, 2018. ARPU is a measure used primarily by consumer communications, digital media, and networking companies, defined as the total revenue divided by the number of subscribers.

A study carried out by Tekedia, with focus on operators, showed that though competition has been much in the sector, the OTT services have seriously reduced operators’ revenue, not only in Nigeria, but across the globe.

It noted that when the ARPU dropped to $18 in 2006, the country already had Glo and Airtel (Econet, Zain, Celnet), meaning that the reduction of ARPU is not just on direct industry competition, but that the OTTs are having a real effect.

Already, Ovum, an independent analyst and consultancy had revealed that the growing adoption of OTT services by customers instead of traditional telecoms services will occasion global revenue loss of $386 billion over a period of six years (2012 – 2018) for the traditional telecom operators, thus endangering network development.

According to Ovum, the increasing usage of OTT services by customers is adversely impacting on traditional telecom platforms in several ways, as a 2016 data shows the voice minutes have been declining due to the impact of OTT.

The report noted that telecom operators are losing money to OTT players who do not invest in infrastructure, but offer voice, video and messaging services free of charge to their users. They do not also pay taxes and not answerable to any regulation.

On the impact of OTTs operations on operators, the Association of Licensed Telecommunication Operators of Nigeria (ALTON), have times without numbers complained that the OTT services are impacting negatively on their operations, especially as it concerns revenue generation.

Chairman of ALTON, Gbenga Adebayo, said that OTTs utilize traditional MNO infrastructure to drive huge advertising revenues, thereby leaving the operators with dwindling revenue.

“Telecom Operators (Telcos) incur the costs to invest a lot on network infrastructure in order to provide basic and innovative services to customers, yet OTT players make the money,” ALTON said.

But in an interaction with journalists in Lagos, the Nigerian Communications Commission (NCC) Executive Director, Stakeholders Management, Sunday Dare, challenged the operators to become more innovative. He stressed that NCC won’t regulate technology.

Meanwhile, MTN Q1 2018 report showed that the South African firm made about N81 billion in revenue.

Going by the report, MTN had ARPU of $4.14 for the 54,528,527 subscribers it recorded for Q1 2018; the implication is that MTN Nigeria made revenue of $225,748,101.78 for the quarter. In Nigeria, using the reported ARPU in Naira, the revenue was N81.4 billion for the quarter.

Glo, Airtel and 9mobile all have subscriber base of 39.04 million, 38.9 million and 16.3 million respectively.

The Group result showed that MTN Nigeria increased service revenue by 14.4 per cent YoY, led by a
73.2 per cent increase in data revenue and 15.2 per cent growth in voice revenue. While the increase in voice revenue was encouraging, it was supported by the lower customer spend on VAS. As growth in our digital services is expected to resume in the latter part of the year, this may impact growth rates in voice revenue.

MTN Nigeria reported net additions in the quarter of 2.3 million following on from the 2.0 million additions in 4Q17 as the business benefited from the increase in SIM registration footprint.

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