nigeria telco in 2011-top 5 trends to watch
TRANSCRIPT
-
8/7/2019 Nigeria Telco in 2011-Top 5 Trends to Watch
1/11
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
-
8/7/2019 Nigeria Telco in 2011-Top 5 Trends to Watch
2/11
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.
2 of 11
7/12/2010Nigeria Telco in 2011
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.
-
8/7/2019 Nigeria Telco in 2011-Top 5 Trends to Watch
3/11
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.
3 of 11
7/12/2010Nigeria Telco in 2011
-
8/7/2019 Nigeria Telco in 2011-Top 5 Trends to Watch
4/11
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.
4 of 11
7/12/2010Nigeria Telco in 2011
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.
-
8/7/2019 Nigeria Telco in 2011-Top 5 Trends to Watch
5/11
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.
5 of 11
7/12/2010Nigeria Telco in 2011
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).
-
8/7/2019 Nigeria Telco in 2011-Top 5 Trends to Watch
6/11
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.
6 of 11
7/12/2010Nigeria Telco in 2011
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.
-
8/7/2019 Nigeria Telco in 2011-Top 5 Trends to Watch
7/11
7/12/2010Nigeria Telco in 2011
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.
7 of 11
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.
-
8/7/2019 Nigeria Telco in 2011-Top 5 Trends to Watch
8/118 of 11
7/12/2010Nigeria Telco in 2011
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:
-
8/7/2019 Nigeria Telco in 2011-Top 5 Trends to Watch
9/11
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.
ENQUIRIES
For more information how we can be of help to your business and or other specialist services we
offer, please contact:
Tel:
+234 1 8990305
+234 803 4024 402
+234 803 4492 586
+234 802 3151 150
Mail:
Address:
Sharemind Nigeria,
2 Billingsway Oregun-Ikeja
Lagos Nigeria,
Copyright 2010 Mainsail Media trading as Sharemind Nigeria.
2 Billingsway Oregun-IkejaLagos Nigeria
Published in Nigeria,
December 2010.
9 of 11
7/12/2010Nigeria Telco in 2011
-
8/7/2019 Nigeria Telco in 2011-Top 5 Trends to Watch
10/11
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)
10 of 11
7/12/2010Nigeria Telco in 2011
-
8/7/2019 Nigeria Telco in 2011-Top 5 Trends to Watch
11/11
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].
7/12/2010Nigeria Telco in 2011