West African telcos battle declining ARPU says IDC

ITRealms:

The telecommunications companies across Africa and especially in West Africa are increasingly focusing on effectively maximizing their return on investment from data and on monetizing emerging opportunities such as the Internet of Things (IoT) to remain competitive and afloat, reports ITRealms.

The research director for telecommunications, media, and IoT at International Data Corporation (IDC), Mr. George Kalebaila, made this disclosure, attributing this largely to increasing levels of competition that is forcing them to seek new methods to stem the steady decline of traditional voice services via the Average Revenues Per User (ARPUs).

ITRealms gathered that ARPU also known as average revenue per unit is a measure used primarily by consumer communications and networking companies, defined as the total revenue divided by the number of subscribers over a given period or month.

"We expect to see greater market consolidation as telcos increase their efforts to acquire smaller ISPs in response to the challenging marketing conditions," he said.

Kalebaila was particular about telcos operating in West Africa, saying this has been driven by heightened market saturation, declining average revenues per user (ARPUs), increasing operating expenditure, and diminishing profit margins on services.

As such, he said, IDC expects some consolidation within the market, especially between local ISPs that possess 4G LTE frequencies and fibre-to-the-x (FTTX) infrastructure and multinational telcos with solid financial support.

In markets where 4G adoption is already gaining traction, discussions around fifth-generation network technology (5G) will take center stage, creating awareness and bringing the possibilities and expectations of future data networks to the forefront.

"IDC expects vendors to focus on the higher bandwidth 5G offers and the technology's potential ability to support emerging services such as IoT, seamless video on demand or Internet Protocol Tv (IPTV), drone video recording, smart city solutions, and virtual reality applications," Kalebaila said.

IDC, ITRealms reports also expected 5G to deliver gigabit connections that enable the seamless delivery of rich multimedia services and applications.

As competition continues to increase in Africa's more mature telecom and IT markets, the need to attract and retain customers through differentiation has become imperative. This means that telcos must move beyond traditional connectivity offerings and provide IT services such as unified communications and collaboration, cloud, and datacenter services.

"In the medium to long term, telcos will be forced to re-evaluate their business models to efficiently design, develop, and deliver cost-effective solutions and services," Kalebaila said.

He pointed out that this may compel telcos to migrate from operating legacy networks to deploying agile systems that are capable of increasing operational efficiency while speeding up the time to market of new solutions.

“Those telcos that prioritize technologies such as network functions virtualization (NFV) and software-defined networking (SDN) for the delivery of connectivity, cloud, and datacenter services will be well placed to maximize cost savings, achieve greater efficiency, and increase productivity," he said.

Chuks Egbune/GEE

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