are vas becoming a revenue driver in the mobile communications market in sub- saharan africa?
TRANSCRIPT
Are VAS Becoming a Revenue Driver in the Are VAS Becoming a Revenue Driver in the Mobile Communications Market in SubMobile Communications Market in Sub--
Saharan Africa?Saharan Africa?
Jiaqi Sun, Jiaqi Sun, ResearchResearch AnalystAnalyst
Information & Communication TechnologiesInformation & Communication Technologies
30th 30th NovemberNovember 20112011
Today’s Presenter
Jiaqi Sun, Research Analyst
Frost & Sullivan
2
• Jiaqi joined Frost & Sullivan’s African ICT team in 2009. He focuses on
analysing the unified communications and telecommunications industry
in sub Saharan Africa
• Dynamic expertise in mobile broadband, VAS, fixed-line
communications, unified messaging, mobile payment, and M&As
• Prior to joining Frost & Sullivan, Jiaqi worked briefly as a junior
consultant with SHIVA Capital GmbH in Munich Germany, focusing on
the automotive and real estate markets of China and India
Agenda
2
3
Introduction
VAS Offerings – Present and Future
Strategic Objectives and Business Models
1
3
4
5
6
VAS Opportunities
VAS Best Practices
Conclusions
7 Q & A
Introduction
Mobile Services Evolve by Adding Complementary Mediums of Communications
Voice + SMSVoice + Messaging +
Internet
Voice + Multimedia +
Applications
Traditional Mobile Basic Mobile Advanced Mobile
4
Communications Communications Communications
VAS Delivery Mediums Examples
SMS/MMS Premium-rated SMS, SMS/MMS subscriptions
USSD Airtime transfer, mobile money transfer
IVR Information services by dialing short-codes
Web Images, music, game and video downloading
Combinations of above mediums WebtoSMS, SMStoEmail, Voice SMS
VAS
Call-related VAS
Call Blocking, Call Forwarding,
Callback, Missed
Multimedia VAS
Messaging:
SMS and MMS Subscriptions, IM,
Premium Content:
Broadband Internet,
Other VAS
Enterprises
Mobile Commerce (B2B
Consumers
Mobile Payment (P2B and P2P), SIM
Introduction
Primary Categories of VAS
5
Note: Other enterprise VAS are mainly application-based services including mobile advertising and marketing, premium-rated SMS, FMC/telemetry
services, shared bundles , and customer support services.
Other consumer VAS include, among others, CUG, maps, email, and social networking applications.
Callback, Missed Call Alert, Airtime
Transfer, ReachabilityNotification
Subscriptions, IM, Voicemail, Voice
SMS, SMStoEmail, WebtoSMS
Broadband Internet, Ringback Tones,
Blackberry/iPhone, Conference Calling,
Entertainment
Mobile Commerce (B2B and B2P), Bulk SMS, Rate
Analyzers, Self-Service Portals, Itemized Billing, and other enterprise VAS
and P2P), SIM Replacement,
Cellphone Blacklisting, Itemized Billing, Mobile
TV, and other consumer VAS
Source: Frost & Sullivan analysis.
South Africa Kenya Nigeria Uganda MessagingPremium Content
Other VAS (Consumer)
Other VAS (Enterprise)
•Vodacom•MTN
•Safaricom•Orange
•Starcomms•Airtel
•WaridtelNetwork
Operators√ √ √ √
•Internet Solutions•MWEB•Webstorm
•AccessKenya Group •Wananchi Group •KenyaWeb
•21st Century Technologies•Africa Online•iWay Africa
•Infocom•Africa Online •AfsatCommunications
ISPs √ √
•Interactive
VAS Offerings – Present and Future
Key VAS Market Participants
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•Content Connect Africa•EA Mobile•35050•DSTV Mobile
•Interactive Media Services •Liberty Africa •Mtech Communica-tions
•MES/Exact Mobile •3way Communica-tions•FIJI Ventures
•SMS Media •In2EastAfrica •Ultimate Media Consult
Value-Added Content and Catalogue Providers
√ √ √ √
•Apple •Google•RIM•Comviva•Ericsson •VISA (Fundamo) •MCI Consultants•Buzz Bus•Ad Mob•MXit
•Google •Microsoft•Ericsson•Nokia •Samsung •eMobilis •Softlink Options
•Datatronics •Peers Consulting •Eresoft •Multisoft Consulting •Future Technology Systems •Ericsson
•ATX Technology •BitWork Technologies •Future Link Technologies •Data Fundi •Yo Uganda
Application Developers
√ √ √ √
Source: Frost & Sullivan analysis.
Safaricom Vodacom Orange MTN Airtel
Messaging VAS
Premium Content VAS
VAS Offerings – Present and Future
Trends of Major Categories of VAS Offered by Network Operators
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Premium Content VAS
Other VAS (Enterprise)
Other VAS (Consumer)
Source: Frost & Sullivan analysis.
Stable IncreasingDecreasing
Strategic Objectives and Business Models
Strategic Objectives of VAS
Main ObjectiveSub-Objectives Tactics
• Reduce customer churn•
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Source: Frost & Sullivan analysis.
Total Revenue Growth
••Increase data ARPU
• Drive subscriber growth
• Boost voice minutes
• Build competitive differentiation
• Reduce OPEX
• Customer loyalty programs
• SMS televoting services
• Dynamic billing structures
• Customer education
Strategic Objectives and Business Models
Impacts of VAS Offerings on Business Models
Backward Integration
Short term Medium term Long term
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Source: Frost & Sullivan analysis.
Strategic AlliancesIntegration
Organic Growth
Forward
Integration
Goals • Partnering with
technology vendors and
content providers
• Merging with media and
broadcasting service providers
• Acquiring ISPs to enrich portfolios
• New technology R&D
Strategies
VAS Opportunities
Mobile Payment and Commerce Services are Primary VAS Revenue Drivers in SSA
High
Impact on R
evenue G
row
thIf
Successfu
l
Mobile payment/commerce
Telemetry services
Video calls
Rate Analyzers
Tracking of mobile phones
Social networking applications
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Source: Frost & Sullivan analysis.
Probability of Success
Low High
Low
Impact on R
evenue G
row
thIf
Successfu
l
Mobile advertising/marketing
Mobile TV
Bulk SMS
Self-service portals
CUG
VAS Best Practices
Devices and Verticalization are Primary Elements of Business Models
Low-Cost and Advanced Devices
Practicality and
Customized Solutions per
Industry Verticals and
Consumer Segments
Full Network Coverage
� Devices are important in mature and high-growth markets as telecommunication service providers are striving to offer new and innovative VAS to attract and retain customers.
� Operators can enhance their brand awareness by offering handsets incorporating brand names or embedded applications.
Low-cost and Advanced Devices
Full Network Coverage
� By providing customized solutions/services to different industry verticals and consumer segments in each country as well as from country to country, this practice maximizes the spend potential of
Customized Solutions per Industry Verticals and Segments
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and Efficiency-Enhancing Products
Strategic Alliances
Segments
High Value-to-Price Ratios
Niche Areas for
Differentia-tion
Source: Frost & Sullivan analysis.
country to country, this practice maximizes the spend potential of different industries and consumer segments.
� Customer relation management (CRM), enterprise resource planning (ERP), and subscriber data management applications help providers understand customers’ requirements and improve customer support services, driving data uptakes.
Full Network Coverage� Practical applications, such as mobile money
transfer/payment/banking services, can enhance customer value through reduced opportunity cost such as time, convenience, and transportation on visiting banking branches.
� Efficiency-enhancing products, such as monitoring and tracking solutions, will improve operating efficiency in production processes, monitoring and other repetitive activities of enterprises.
Practical and Efficiency-Enhancing Products
VAS Best Practices
Value, Partnership and Niche Areas are Key Elements of Competitive Strategies
Low-Cost and Advanced Devices
Practicality and
Customized Solutions per
Industry Verticals and
Consumer Segments
Full Network Coverage
� Value is determined by benchmarking the market (equilibrium) price and service offerings. Operators and ISPs should offer a higher value-to-price ratio than their competitors by charging a lower price and/or offering more content.
� Market prices fluctuate in the short term, especially for new services like VAS, operators and ISPs should forecast future equilibrium market prices and service development trends to preset value-to-price ratios.
High Value-to-Price Ratios
Full Network CoverageStrategic Alliances
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and Efficiency-Enhancing Products
Strategic Alliances
Segments
High Value-to-Price Ratios
Niche Areas for
Differentia-tion
Source: Frost & Sullivan analysis.
Full Network Coverage
� Strategic alliances are an effective tactic to quickly enrich product ranges and expand geographical footprints.
� Network operators can partner with content providers, technology vendors, and/or ISPs to offer innovative multimedia VAS.
Strategic Alliances
Full Network Coverage
� Network operators and ISPs should focus on those areas that were poorly developed by existing service providers, such as mobile applications and telemetry services, as these areas present the best opportunity for differentiation.
� Network availability and quality of services are key differentiators for VAS requiring stable network performance and large network capacity.
Niche Areas for Differentiation
Conclusions
VAS is a new source of revenue and enables
Customer Retention
New Customer
Recruitment
ARPU
Growth
• Reduced customer
churn rates through
• Reduced customer
churn rates through
• Value-to-price
targets are a key
• Value-to-price
targets are a key
• ARPU growth is the
direct route to
• ARPU growth is the
direct route to
Organic
Growth
• In the long term, the
organic growth
• In the long term, the
organic growth
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Source: Frost & Sullivan analysis.
offering VAS retains
annuity revenues.
• Customer
satisfaction and
value are improved
through enhancing
user experiences.
offering VAS retains
annuity revenues.
• Customer
satisfaction and
value are improved
through enhancing
user experiences.
indicator to assess
the impact on new
customer
recruitments.
• Consumers are
attracted by
premium content.
• Enterprises put
more value on
quality of services.
indicator to assess
the impact on new
customer
recruitments.
• Consumers are
attracted by
premium content.
• Enterprises put
more value on
quality of services.
generating new
revenue by offering
VAS.
• ARPU is boosted
through increasing
data traffic and
voice minutes by
VAS offered
separately and in
bundles.
generating new
revenue by offering
VAS.
• ARPU is boosted
through increasing
data traffic and
voice minutes by
VAS offered
separately and in
bundles.
business model
through R&D is
most sustainable.
• Eventually VAS
becomes a total
revenue driver and a
niche area for new
market entrants.
business model
through R&D is
most sustainable.
• Eventually VAS
becomes a total
revenue driver and a
niche area for new
market entrants.
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Next Steps
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