Nigerian telco's take different approach to free online features - CNBC Africa

Nigerian telco's take different approach to free online features

Western Africa

by Dara Rhodes 0

Telco's are the forefront of the growth of internet in Africa. PHOTO: Getty images

Free online features such as Google Hangout, Skype and Tango have been blamed for the 20-30 per cent drop in their revenues on international calls and messaging in 2013 and may soon be cut.

“There’s nothing stopping them legally, this isn’t a problem that only African Telco’s are having, this is a problem that Telco’s all over the world are having. Over the top services like Facebook are replacing traditional telephone calls,” Seyi Taylor of Techcabal told CNBC Africa.

Mobile service provider executives around the world are showing increasing concern about over the top voice and messaging apps because according to a survey by Mobile Squared, these apps affect traffic for almost 75 per cent of mobile service providers operating in 68 countries.

“With video calls, things are significantly cheaper, the cost is bundled under your data plan and people prefer to use these services, so it’s a global problem that all Telco’s are facing.”

According to Taylor, despite this, there are opportunities for Telco’s however, they will have to make significant changes to the way they approach the market.

“There are three simple ways that I think Telco’s tend to respond, one of them, is to try and block. It hasn’t worked very well. I’m not aware that it has started happening in Nigeria but there have definitely have been threats about it happening,” he explained.


Taylor also believes that another way Telco’s all over the world have responded to this growing threat is by, trying to create their own over-the-top services to compete with the existing ones, however, this has been very difficult.

“Africa is bit different because Africa is one place where Telcos have pushed the growth of the internet, they are at the forefront of the growth of the internet whereas in some other developed companies, you have pure broadband companies, in Nigeria, in Africa, you do tend to have mobile internet as the predominant source of internet,” he added.

Last year, MTN acquired a 33 per cent stake in Africa Internet Holding (AIH) the parent company of Jumia, one of Nigeria’s leading online retail stores and Taylor believes this is the way Telco’s need to go.

“One of the ways the Telco’s can respond to the over-the-top threat, and this is what seems to work, is to invest in companies that are providing over the top services,” he said.