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Telcos renew battle for market share

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'Current rates no longer sustainable,' Telcos mull tariff hike

…as data, local, international call rates crash

By AYOOLA OLAOLUWA

Nigeria’s five Global System for Mobile Communications (GSM) firms, Globacom; MTN, Airtel, 9Mobile and Mtel have intensified their battle for greater voice and data market share. According to Business Hallmark findings, the operators, in a bid to outsmart each other for more market share, are deploying several tactics, including tariffs cut and massive advertisement.

After the outbreak of coronavirus, voice revenue has increasingly come under pressure as Nigerians adopt digital services for their communication. The subsequent lockdown forced millions of Nigerians into their homes, with them using more digital services in their daily routine.

Owing to this, operators’ revenue stream from voice is now under threat, in part from digital platforms. Sources at MTN and Airtel disclosed that the trend is increasing their data revenue and they are frequently improving their infrastructure as a result.

However, MTN admitted in its latest quarterly report that data revenue is still not high enough.

“Although we have witnessed growth in data revenue, it does not fully offset the decline in voice revenue,” said Ferdi Moolman. “We started experiencing a change in traffic patterns with a drop in voice traffic which was partially offset by an increase in data traffic on the network.

“Data traffic spiked as subscribers began to adopt digital channels for most of their activities and routines including telecommuting, entertainment and social media engagements”, said CEO of MTN Nigeria.

In a bid to boost their revenue, as well as taking advantage of the shift, operators have cut down prices amid offerings of several bonuses. For instance, all the operators have slashed their data prices by half. Findings revealed that 1.5GB, which was sold for as much as N3000 in 2019 now goes for between N1,000 and N1,200 depending on the network.

Subscribers on the 9Mobile network, checks revealed, can get 7GB for just N1,500/week, while subscribers on MTN network can get 4.5GB for N2,500 and 8GB for N3000, depending on the plan. On the other hand, Airtel subscribers can get 6GB for just N1,5000.

The price war is already creating excitement in the telecom sector, with Nigerians arguing that the war should have started a long time ago, as tariffs paid by phone users in Nigeria are on the high side. The tariff war was started by Airtel in April which offered discounts on its monthly and weekly data bundle plans to subscribers.

Under the new tariff plans, Airtel dropped data bundle tariff on most of its data bundles, offering customers 15GB for N5,000 monthly bundle and 6GB for N1,500 weekly bundle. Airtel also has 50MB daily for N100, 16GB for N8000 with a validity of 30 days, among others.

Not done yet, Airtel Nigeria last week slashed data prices for online education by 50%. The heavily subsidised data and mobile Internet is for all Nigerian schools and students using the Dynamiss Learning Management Systems. Customers of Airtel who access the Dynamiss platforms will now enjoy up to 50 per cent discount on data/mobile Internet charges effective immediately.

This discount also applies to schools, students and even parents on the Airtel network who use any of the educational platforms provided on Dynamiss. Since the outbreak of Coronavirus, Microsoft has recorded more than 350 million subscribers who now use its educational platforms. The number continues to increase daily in Nigeria and across the globe.

A source in Microsoft told BH that with the package, Airtel intends to win over millions of Nigerians using its platforms for virtual meetings and classes.

Speaking on the telco’s commitment to drive affordable mobile broadband, the Chief Commercial Officer, Airtel Nigeria, Mr. Dinesh Balsingh, said: “The Company strongly believes in the government’s drive of democratising broadband, extending quality mobile Internet services to the remotest location in the country as well as ensuring that Nigerians regardless of income level can afford data/mobile internet services.”

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He noted that prevailing consumer trend indicates a growing demand for data/mobile internet, saying the telco was well positioned to take the lead in providing the right value offerings as it currently has the largest 4G network in the country.

“As the preferred mobile internet services provider, Airtel is committed to offering superior value to telecoms consumers across the country and our newly revamped data plans is a testament to our commitment to empower our customers.

“With these new data plans, our customers now have higher data allowance to do much more and get more out of life; to succeed, to become more productive and to do so much more” Balsingh said.

In July 2020, Globacom embarked on its own price war when it slashed international call tariffs by as much as 55%. According to the company, the slash is to help its subscribers stay in touch with their loved ones abroad at a much more affordable cost, especially in view of the prevailing international lockdown caused by the Coronavirus pandemic.

The reduced tariffs, which come without any subscription fee, cover calls made to major destinations such as the United Kingdom, France, Italy, Ireland, South Africa, Spain and Saudi Arabia. Other countries affected by the reduction are Cameroon, Niger, Benin Republic, Togo and Cote d’Ivoire. The specific tariffs for each country vary, but are the most competitive in the market.

For example, calls to the United Kingdom which used to cost between N30 and N130 per minute now cost between N24 and N100 per minute depending on the network the call is being terminated on.  Likewise, calls to Spain and Italy were reduced to N75 and N60 per minute from N90 and N130 respectively.

While calls to South Africa now attract N85 per minute instead of N150, calls to Saudi Arabia is now N55 per minute, down from the former N60. The tariffs for France and Ireland were also slashed to N50 and N40 respectively from N65 and N60, Cote d’Ivoire, Benin Republic, Cameroon, Togo and Niger N150 instead of the old N200  per minute rate.

Globacom has a number of data plans suited to different groups of individuals on Android, iPhone, Blackberry and other smartphones. They include N100 for 100MB, which lasts for two days, especially for students. It also has the same plan for daily users.

Because of its submarine cable system and huge bandwidth capacity, it offers 2GB/N1000 for 30 days. On the network, subscribers who are willing to pay N2,500 can get 7.2GB data valid for 30 days. The company refuted the insinuation that the tariff slash was a price war, but rather an opportunity for subscribers to stay in touch with their friends and family overseas.

“With the ban on international travels imposed by most countries because of the Covid-19 pandemic, people are unable to travel to reunite with loved ones. They now rely heavily on efficient and affordable telecom services to communicate with them.

“We have therefore, reduced tariffs to these major destinations to make our subscribers still feel at home even when they are thousands of miles apart from their loved ones. With these reductions, calling your loved ones abroad has never been more affordable,” the company stated.

9Mobile customers on the other hand now enjoy 10MB, 40MB for as little as N50 and N100 respectively. The telecommunications firm also offers 11.5GB for N8000 and 15GB for N10,000.

Further checks revealed that Internet Service Providers (ISPs) are not left out of the price war. For instance, Spectranet sells 8GB for N2,000; 10GB for N3,000; 14GB for N4,000 and 30GB for N7,000. Smile Communications offers 1GB for N1,000; 2GB for N2,000; 10GB for N9,000 and 15GB for N10,000.

According to an industry source, the aggressive price war embarked on by the big five also targeted at the ISPs.

“Their (ISPs) future is in jeopardy as the big four with massive reserves are trying to muscle them out of the market. MTN had put in three unsuccessful offers to buy up one of them. The price war is to force them to sell or close shop. They have the resources to prosecute a prolonged price war. They are waiting for the first to blink”, a staff in one of the ISPs confided in BH.

Meanwhile, telecoms experts have blamed the ‘price ‘war’ among telecoms operators as one of the major causes of poor service quality faced by Nigerian subscribers. They argued that while consumers have enjoyed the competition and its attendant slash in prices, they have had to endure drop in voice and data quality.

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A voice engineer with one of the telecoms firms who did not want his identity disclosed, said that subscribers are unable to enjoy the mouth-watering packages either because they get exhausted too quickly or are fluctuation-prone, leaving users frustrated.

According to Research ICT Africa, data price is relatively cheaper in Nigeria. Speed is the performance of a connection based on the number of bytes per second that data travels to and from a user’s device. Depending on the type of connection, the speed differs dramatically; the download rate is higher than the upload because a short request to the website (upload) results in a much larger download of Web pages, images and videos.

Speaking on the price war, which largely contributes to the quality of service, the Chief Executive Officer of Spectranet, Ajay Awasthi, said that war of any kind is destructive by nature, and a price war is no exception.

Awashti, who called for a review of the suspended Data Price Floor policy, described price war as a shortsighted ploy to gain market share.

“It may be touted as a ‘customer friendly’ move. But over a period of time, a price war results in a significant destruction of value for the industry, forcing the players to degrade quality of services. A price war is not sustainable in the longer term and is lose-lose proposition for both the operators and the customers.

“The hapless customers finally end up at the receiving end and are made to suffer through poor quality of service. For our firm, we stay committed to providing high quality, high speed broadband to our customers. We believe in delivering a superior customer experience through better understanding of their needs and through differentiated tariff plans backed by excellent customer service”, the Spectranet CEO stated.

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