Digital Services in Africa: New revenue opportunities.

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Digital services in Africa: New revenue
opportunities
AfricaCom 2013

Matthew Reed
Principal Analyst
Informa Telecoms & Media

Data revenues play an increasingly prominent
role in Africa’s growth story
Africa, mobile voice and data revenue
forecasts, 2012-2018

www.informatandm.com

• The story of Africa’s telecoms market
continues to be about growth.
• There were 778 million mobile
subscriptions in Africa at end-June 2013
and ITM forecasts that the continent’s
mobile-subs count will reach one billion
during 2015 and 1.2 billion by end-2018.
• Mobile voice revenues in Africa are
forecasted to continue growing over the
next few years.
• Mobile data usage and revenues are
growing strongly in Africa, and at a faster
rate than voice revenues.
• Annual mobile data revenues on the
continent are forecasted to rise from
US$8.5 billion in 2012 to US$23.2 billion
in 2018.

2

Non-SMS services will lead the growth in data
revenues in Africa
Africa, SMS and non-SMS data revenue
forecasts, 2012-2018 (US$ million)

• Non-SMS data revenues will grow
strongly and will account for an
increasingly substantial part of data
revenues.
• ITM is forecasting that non-SMS
mobile data revenues in Africa will
rise from about US$5billion in 2012
to almost US$20 billion in 2018.
• A large part of those non-SMS
revenues will relate to data
connectivity.
• But the rise in data connectivity in
Africa is also creating a platform for
a range of new digital services on
the continent.

Source: Informa Telecoms & Media

3

Digital services in Africa: A view from the
industry
Views on the digital service opportunity in
Africa

• Are digital services important to the
African industry?
• 50% of survey respondents
strongly agreed that African
operators should explore
opportunities in digital services
now.
• 49% strongly agreed that African
operators that do not develop
digital services risk being left
behind.
• Few respondents thought Africa is
not ready for digital services, or
that African operators should not
venture into this area.


4

Digital service opportunities in Africa: A view
from the industry
The most important digital services for
generating increased revenues in Africa, now and
in five years


• What does the digital service
opportunity in Africa comprise?
• Mobile-money services ranks first –
it is seen as the most important
category of digital service currently
by 47% of respondents.
• Mobile money is expected to
continue to be the most important
category in five years’ time.
• Social-media is ranked second now
and third in five years’ time.
• E-commerce is expected to become
increasingly important; it is seen as
the second most important category
in five years.

5

Digital service take-up in South Africa: Consumer
survey
South Africa, mobile service usage,
consumer survey 2013


• Among the most popular data and
digital services in both Nigeria and
South Africa are: e-mail; instant
messaging; browsing the Internet; and
social networking services.
• In South Africa, smartphone users
spend an average of 1.5 hours per
week browsing the Internet and 2.5
hours using social-media services.
• Instant messaging is very popular with
South African smartphone users, who
send an average of 150 instant
messages a week compared with 25
e-mails.

6

Digital service take-up in Nigeria: Consumer
survey
Nigeria, mobile service usage, consumer
survey 2013


• The survey also revealed significant
use of e-commerce, gaming, music,
video and VoIP services.
• In both Nigeria and South Africa,
smartphone and tablets users carried
out an average of three e-commerce
transactions per week.
• Nigerian tablet users spent an average
of 2.5 hours per week watching
streamed video and two hours per
week listening to streamed music.
• In both Nigeria and South Africa,
smartphone users spent 1.5 hours per
week playing online games while tablet
users spent 2.5 hours per week on
online games.

7

Mobile financial services: Safaricom’s M-Pesa
service
Safaricom’s M-Pesa revenues, financial
years 2010-2013


• Safaricom’s M-Pesa, which was
launched in 2007, had 17.1 million
users by March 2013 and contributed
KES21.84 billion (US$252 million) to
Safaricom’s revenues in the 2013
financial year.
• Safaricom’s revenues from M-Pesa in
the 2013 financial year were up by
29.5% year-on-year and accounted for
18% of the operator’s total revenues
for that year.
• Non-voice services contributed 33% of
Safaricom’s revenues in the 2013
financial year, with M-Pesa accounting
for more than half of those non-voice
revenues, while the rest was split fairly
evenly between SMS, and fixed and
mobile data.
8

Mobile financial services: Deployments in Africa
gather pace
• Vodacom Tanzania said it had 4.9 million M-Pesa customers in March 2013
and that M-Pesa accounted for 14.1% of service revenues in year to March
2013.
• Most other major operators in Africa have also introduced mobile-money
services. Orange launched Orange Money in Cote D’Ivoire in 2008 and the
service is now offered by a dozen of Orange’s operations in MEA.
• Airtel offers mobile-money services across much of its African footprint
through a partnership with Ecobank.
• Etisalat has launched mobile-money services in a number of its African
operations, including those in Egypt and Nigeria.
• MTN said it had almost 12.1 million mobile-money customers at the end of
June 2013, a year-on-year increase of 64.5%.
• Early in 2013, Millicom unveiled a new strategy based on the growth in digital
services, such as mobile money, in Africa and Latin America. Millicom said
that it expects to make revenues of between US$600 million and US$1 billion
a year from mobile financial services by 2017.

9

E-commerce: Gaining momentum in Africa

• E-commerce is new to much of subSaharan Africa, but is gaining
momentum, as demonstrated by the
launch and growth of services such
as Jumia and Konga.
• Jumia is a shopping portal that sells
consumer electronics and fashion
goods; it has operations in Cote
D’Ivoire, Egypt, Kenya, Morocco
and Nigeria. Konga is a Nigerian
shopping portal that also focuses on
fashion and electronics.
• Jumia is backed by Rocket Internet,
a Berlin-based incubator, which is
also behind several other ecommerce ventures in Africa.


Jumia Nigeria online shopping service

• Millicom has acquired a 20% stake
in Rocket’s African and LatAm
ventures.
• Millicom expects its partnership with
Rocket to bring in annual ecommerce revenues of US$1 billion
by 2017.
10

E-commerce: Orange’s strategy
• Orange is also addressing the e-commerce market in Africa – and
elsewhere – through a new subsidiary, Orange Horizons. Orange
Horizons’ brief is to develop new businesses, such as online stores, other
digital services or MVNOs.
• The first two projects launched by Orange Horizons were aimed at the
South African market. One of the projects is an online store that sells
telecoms devices and accessories, and the other is a content website
that hosts news and other editorial designed for a South African market.
Orange online store, South Africa

Source: Orange
© Informa UK Limited 2013. All rights reserved

11

Digital media: Fuelled by the rising use of
smartphones and tablets
• The growing availability of mobile broadband networks in Africa,
combined with the take-up of advanced devices such as smartphones
and tablets, is fuelling a rise in the use of digital media such as gaming,
music, social-networking and video.
• That growth is demonstrated by operator results, such as those from
MTN Nigeria, which said recently that the number of unique users of its
content portal MTN Play rose from 135,000 in October 2012 to 720,000
in March 2013.
MTN Nigeria Afrinolly app

Source: MTN Nigeria

12

Digital media: partnerships are key

• MTN Nigeria is offering a dedicated
data plan for Eskimi, the Nigerian
social-networking service. Subscribers
can buy unlimited access to Eskimi,
which claims to have six million users,
for a flat weekly or monthly fee.
• In 2012, Orange launched the musicstreaming service Deezer in Africa
through its subsidiaries in Cote D’Ivoire
and Mauritius, by bundling access to
Deezer with broadband subscriptions.
• Orange also has an agreement with
games publisher Gameloft to distribute
Gameloft titles in Africa and the Middle
East.


13

Enterprise market: An increasingly important
target for operators in Africa

• Orange is extending its business-market activities and portfolio in Africa
through its Orange Business Services unit.
• Orange is able to take advantage of its substantial resources in the
region, which include: its local subsidiaries; its investments in submarine
cables connecting to Africa; and assets such as the Orange Labs R&D
unit in Cairo and customer-service centers in Cairo and Mauritius.
• Vodafone recently revealed that its revenues from Africa’s business
sector have been growing strongly, exceeding €1billion (US$1.4 billion)
during the year to March 2013. The operator said it would set up new
offices in Nairobi and Accra to serve the business market.
• Among MTN’s new services for the business market are a portfolio of
cloud-based software services for SMEs, which it launched in Ghana
and Nigeria in April 2013 and plans to extend to Cameroon, Cote
D’Ivoire, Uganda and South Africa.


14

Digital will re-shape the industry: Survey

Which types of company are/will be the most
influential in the African telecoms industry today
and in five years?


• Operators are seen as the most
important players in the industry
and are expected to retain that role
in five years’ time.
• But operators will see their relative
importance in the industry decline
over the coming five years.
• Operators are the only major
category of player that is expected
to experience a decline in
importance.
• Device manufacturers, media
companies and OTT providers are
expected to see notable increases
in their importance in the industry.
• Successful operators will be those
that adapt best to change.
15

Africa Telecoms Outlook 2014:
Maximizing digital service
opportunities
New report published by Informa
Telecoms & Media: Visit ITM
Industry Research stand C5b to
collect a free copy.


16

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Digital Services in Africa: New revenue opportunities.

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