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Rise in smartphone ownership gives push to N162bn VAS market

News » Technology/Innovation


Nigeria’s N162 billion ($1 billion) mobile Value Added Service (VAS) market is set for significant growth in the next few years, riding on the back of rising smartphone acquisition, the opening of new markets as well as sustained efforts by government and telecommunication companies (telcos) to enhance broadband availability, industry insiders have said.

The National Broadband Council is pushing for increased 3G coverage to 50 percent of the Nigerian population by 2015.

The number of smartphone users is, however, expected to rise to more than 35 million in 2017 from 5.6 million at the end of 2012, according to research company, Informa Telecoms & Media.

Africa’s mobile VAS market is expected to reach $11.5 billion by the end 2014. “The mobile VAS sector will witness significant growth due to rising smartphone penetration,” said Ugo Okoye, chief executive officer (CEO), iConcept Limited.

Low-end smartphones are increasingly available and these types of mobile phones will likely grow at a CAGR (compound annual growth rate) of 15 percent over the coming years, according to market observers. “With more smartphones in the hands of more Nigerians, there would be greater innovation with regards to creating new and better content services that everybody can use,” said Okoye in an interview with BusinessDay.

According to him, the mobile VAS sector has witnessed enormous growth in recent times because Mobile Network Operators (MNOs) no longer rely solely on voice services for revenues. Initially, when the mobile networks rolled out services in 2001, according to him, over 99 percent of their service revenue was derived from voice.
“That has slowly declined year-on-year (YoY). Currently, VAS contributes about 10 percent of telecom operators’ revenue,” he also stated.

Market observers are of the view that increasing adoption of smartphones and tablets PCs is enhancing the demand for and use of mobile VAS. This growth, according to them, will continue over the years, as local content developers, MNOs, the regulator, and other stakeholders jostle to expand the scope of the market.

Paul Lee, director, global TMT research leader for Deliotte, said in an interview that the widespread adoption and usage of instant messaging services (MIM) from Over-the-Top (OTT) providers like Whatsapp, Viber, Facebook, and BBM, is an indication that communication no longer occurs exclusively on voice, especially amongst the nation’s vibrant youth population. This development is contributing significantly to declining voice revenues. Average Revenue Per User (ARPU) for voice services is expected to decline steeply by around $5 per month over the next five years.

This figure is down from $6-$7 in April 2013 and $10 in 2008. “The telecoms operators have seen that smartphone penetration is on the rise and data service is the future.

“So, MNOs have to create a lot more VAS services such as mobile apps and content services. That’s the only way they can find the right balance in their revenue stream,” said the iConcept CEO.

Market observers say mobile VAS will become a sizzling growth ticket for telecoms operators, opening up new revenue streams over the next decade.

“We are aggressively working with the original equipment manufacturers (OEMs) to push smartphones into the hands of Nigerians”, said Osondu Nwokoro, director, regulatory affairs, Airtel Nigeria.

Article Credit: Businessdayonline

Updated 5 Years ago

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Tags:     VAS     telcos     Ugo Okoye     Concept Limited     MNOs     Smartphone Owership