nigeria telco in 2011-top 5 trends to watch

8/7/2019 Nigeria Telco in 2011-Top 5 Trends to Watch

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7/12/2010

opyrights 2010. All Rights Reserved. A Property of Sharemind Nigeria. Sharemind is an affiliate of Mindshare Worldwide, a groupM Compan

Nigeria Telco in 2011

2011:Top 5 trends to watch in the telecoms market


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Although, the country is moving into an election year that will certainly, affect the

media and marketing scene, we believe there are more to the coming year in the

telecoms segment than the routine general elections.

Background

In less than a decade, the Nigerian telecom segment has not just taken huge steps

towards maturity, it has in a short period of time become the driving-force of the

Nigerian economy. The sector is likely to take over from the banking sector as one

of the largest employer of skilled and unskilled labour and in respect to our

industry, the telecoms segment has dwarfed FMCGs and breweries to become the

most active sector in media and marketing.

From a competitive perspective, the GSM category with over 77 million active

subscribers base (with a total of 88M active lines, the GSM category has over 86%,

CDMA 8% and FDW 2%-source: NCC industry statistics, Dec., 2010)) shared among

four key players, the future of telecoms market looks very competitive as a result of

obvious and discrete dynamics

At Sharemind Nigeria we used our analytics and foresight knowledge to highlight the

five keys trends that will shape the telecoms category in 2011 and beyond.

By 2011, the telecoms category will be setting in motion series of unprecedented

chain reactions and events that will definitely change the rules of media and

marketing of telecoms brands in particular and the Nigerian economy in general. In

matter of importance to media and marketing, it is believed to reflect in radical

changes in consumer behaviour, media habits and lifestyle swings that media

specialists must watch closely.

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Telecoms segment (GSM players in particular), were responsible for over 30% of the

countrys ad spend in 2009 (MMS, Sharemind adspend upweighted figures).

Through massive investment in sponsorships, reality shows and activations, the

segment was the life wire of major marketing and media specialists and their

suppliers in the face of the business-threatening recession that ate the budget of

major advertisers.


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Number Portability

The Nigerian Communications Commission (NCC), has not rescinded in its resolve to

kick-start the number portability policy in the country by 2011. The compulsory SIM

registration (which has more significance to regulators market control, national

security and intelligence) is its precursor. Number portability allows a subscriber to

switch network or operator without changing his line and loosing his contacts.

Though the sophistications and technical processes of implementing number porting

make it gradual, the news of its take off, will excite subscribers, this will have aserious implication on brand loyalty among users. Operators will likely react by

crashing tariffs, engage in ceaseless promotions and margin depleting tactics to

retain them.

Last entrants and incoming players like Etisalat with less than 3% market share

(source: NCC industry statistics, Dec., 2010), CDMAs with less than 11% of the 88

million active subscriber base will gain significant market share if they can take

advantage of the disenchanted subscribers who will be emigrating to their network.

Depending on how stiff the policy is on the authorised frequency of migration,

operators with incessant network failures might experience an exodus of subscribers

that might not come back.

This ought to be the time for operators to build their brands through clear-cut

strategies and offering differentiation. Simple communication with cost-effective

media buying plan backed by target-proof media strategy across viable platforms will

suffice.

Implication:

As usual, operators might use the old strategy of protecting and building market

share. There is high probability of telecom brands churning-out unending

promotions in the bid to protect and build market share.

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Network Sharing

For over three to four years now, the NCC has been conversing with network

operators to work out the modalities on how they can share network infrastructures

and other technical resources which it christened Collocation and infrastructure

sharing

Implication:Due to the economic advantages network sharing offers to small players and

regionally-restricted telecom brands to reduce their CAPEX on network

infrastructures and facilities, regional brands that meets up with the requirements

to share resources can easily increase their coverage to national status, gain market

share and thereby making the market more competitive.

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As clearly spelt out by the NCC in its guidelines, network sharing does not denote

the sharing of: complete network structures, switching centers, frequencies, radio

network controllers and base stations and also more importantly, business

intelligence, marketing strategies and objectives. Conversely, it could be very

difficult and complex in implementing it in Nigeria as a result of market immaturity,

less sophistication of infrastructure, operators fear of loosing the proprietary nature

of their business and the seemingly incompatibility of corporate philosophies

guiding the different organizations.

In an evaluative whitepaper published by Ericsson (December, 2010), though

network sharing has lots of challenges mitigating its embrace by operators. It can

reasonably reduce capital ex expenditure (CAPEX) and operational expenditure

(OPEX), easy rollout by new entrants or expanding network, boost network quality

and efficiently meets capacity and data traffic. Network sharing regulation allows

new entrants and here-to-fore smaller players out-shine sloppy operators with poor

service.


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Voice saturation

As a matter of fact, these 2.8 million hypothetical individuals are the extremely rural

and poor population who do not have any reason to use mobile phones. Mobile

subscribers among them generate low margin and the revenue per head is

insignificant to operators bottom-line. As a matter of fact, these are the markets

where operators will want to share resources and network infrastructure.

This will allow them to market their services nationally and gain new market shares.

Conversely, in high volume and margin markets such as Lagos, Abuja and Port

Harcourt, operators might not likely share resources and therefore, huge marketing

and communication will continue to drive the market.

Implication:Therefore, telecom brands have to be strategically sound to discover the next big

thing in order to remain competitive and as well profitable. Is it data? If it is data, is

it enterprise? or personal data packages? How do we market data effectively and

still maintain our voice market share. What media strategy is preferable and

effective. All these questions must be strategically answered.

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From an in-house perspective, the Nigerian voice segment is becoming saturated,

reaching an optimum level. Early entrants who captured the high volume subscribers

are the ones benefitting from the boom of voice while late entrants with low-end

users are filling the pinch of tighter margin.

Nigerias 15years+ population is over 80 million (source: US Census Bureau

database, Dec., 2010), active mobile subscribers is 77 mobile (source: NCC industry

statistics, Dec., 2010), this is a penetration of over 96.2%. This means that telecom

brands that wants to increase market share among new telecoms subscribers are

merely fighting for just 3.8% (estimated to be just 2.8 million).


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War of Tariffs

The obvious effect of voice saturation and the need for operators to increase margin,

remain competitive and profitable has resulted in serious price competitions. Some

operators have drastically crashed their tariff to as low as N9 net. calls and N12 off

net. calls.

Implication:

The market is bound to witness high consumer promotions to communicate best

tariff off as operators often wants to be recognised for that. This will manifest in

short term marketing communication with the print media and radio being the

battlefield. TV will be saved for working hours and the war will be intensified at

primetime. Media strategist in the category and other categories such as FMCGs and

Breweries must refresh their threshold on ad clutter particularly prime time , GRPs

and other relevant benchmarks because of the higher frequencies and cacophony

operators will generate.

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It is highly probable that when voice segment saturation is added to incoming

policies of number portability and compulsory network sharing- the market will have

nothing to compete with but price. Who can offer the cheapest call rate with high

quality network and better customer service.


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Data boom The Next Big Thing

Conversely, since these promising statistics does not certainly mean that Internet

subscription in Nigeria is close to 48% of the Internet population, this shows the

inherently high opportunity index in data. It is the next big thing. So as long as over

7M Nigerians use their Yahoomail daily (source: Seed Media estimates), over 250.000

(source: Facebook at 2009), Nigerian youths wants to connect and share with their

family and friends on Facebook, over 14.000 of them wants to read Punch online

(source: Google trends for site December, 2010, past 30 days), about 25,000 wants to

download insightful materials on Wikipedia (source: Google trends for site) and more

importantly, the potentially unhampered capacity increment brought about by the two

new broadband cables (Main One and Glo1 submarine broadband infrastructure,

operators must brace up to meet the growth potential it offers particularly, personal

Internet category and small, medium scale and enterprise data usage will as well pick

up.

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We saw it coming! Internet is growing and it is growing very fast. With a penetration

of just 16.1% (source: ITU), national penetration and 22% urban and semi urban 23%

(source: AMPS 2009), penetration as at the end of 4th quarter of 2010 is estimated

to have grown up to 48.3% (source: ITU, Dec., 2010), that is a percentage growth of

178%.

Although, Nigerias Internet penetration could be said to be very low when compared

to developed and similarly-related emerging markets of the BRICs and PIGs. Butwhen analysed in the context of itself and African perspective, Internet penetration

in Nigeria is growing at a fast spate and operators who wants to increase margin and

remain competitive must be prepared for it.


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Telecom brands must shy away from being token with, stop selling data as a value

added service but as different product offering. Since Nigeria is still majorly an

offline market, traditional media of communication should be tactically and creatively

used to push the product to consumers, Wise operators should aim at innovatively

conversing with the market, dominate it in order to increase margin, remain

competitive and profitable. This is because data is surely the next big thing.

Implication:


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ABOUT SHAREMIND

Sharemind Lagos (formerly Initiative Lagos) is a full-service media strategy and buyingagency. At Sharemind we combine cutting-edge research tools and our glocal expertise to

develop winning strategies and buying solutions for our clients.

Our mission is to be Nigeria 's leading Media specialist company.

Sharemind is an affiliate of Mindshare Worldwide, a global network of experts in media

solutions with offices in over 97 cities of the world.

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For more information how we can be of help to your business and or other specialist services we

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Copyright 2010 Mainsail Media trading as Sharemind Nigeria.

2 Billingsway Oregun-IkejaLagos Nigeria

Published in Nigeria,

December 2010.

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WRITTEN BY:

Samuel Odusami

Research, Ideas, Innovation & Digital Analyst (RIIDA)

Samuel Odusami is currently a Research, Ideas, Innovation and Digital Analyst

(RIIDA) at Sharemind Nigeria (formerly Initiative Lagos), affiliated to Mindshare

worldwide.

His competence in new media, web analytics, design, innovation and media research

has made him relevant in the Nigerian Marketing Communications Industry and

beyond.

In 2009, Samuel was the best graduating student in Department of Mass

Communications (Advertising Major), Olabisi Onabanjo University, Nigeria.

Samuel currently lives in Lagos, he likes trendhunting, graphic design and debating.

eMail: [email protected]

Facebook: www.facebook.com/samuel.odusami.com

EDITED BY:

Kofo Abayomi

Media Planner & Buyer (New Business)

[email protected]

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WARNING & DISCLAIMER

Deliberate efforts were made to make all the information in this material as factual,

complete & accurate as possible, but no warranties regarding its contents, whether fact,

speculation or opinion, are made nor is fitness for any use implied. Information provided

is on an as is basis and for knowledge purpose only. All cited sources, tool vendors and

Sharemind Nigeria/Lagos shall have neither liability nor responsibility to any person or

entity with respect to any loss or damages arising from the information contained in this

book. For full information about Sharemind Nigeria/Lagos visit:www.sharemindlagos.com or via mail: [email protected].


nigeria telco in 2011-top 5 trends to watch

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