Airtime purchase costs Nigerians N2.68trn in 10 months
29-12-2017 15:41:25 | by: Andrea Ayemoba | hits: 4 | Tags: ,

Telecoms subscribers across mobile networks in Nigeria have devoted N2.68 trillion of their household income on purchase of airtime credit on their mobile device, which they used to access both voice and data services from the mobile network operators (MNOs), New Telegraph has learnt.

The airtime was purchased across different platforms such as the physical recharge card option, the virtual top-up (VTU) done through USSD code, subscribers’ bank accounts domiciled on their mobile devices, vending on web-based platforms as well as on Automated Teller Machines (ATMs).

The amount of money spent by the subscribers within the 10 months period also represent the estimated amount of money generated by telecoms as revenue from airtime spending of telecoms consumers, it was gathered.

The estimated airtime spending and revenue for subscribers and telcos respectively, was arrived at using the monthly active subscriber base for the 10 months period spanning January to October, when the telecoms regulator, the Nigerian Communications Commission (NCC) released the latest industry data and the Average Revenue Per User (ARPU).

ARPU is the industry benchmark determined by industry players to measure the average or mean spending by telecoms consumers on airtime, which they, in turn, use to access voice and data services.
Throughout 2017, industry ARPU in the country’s $70 billion telecommunication market floated around $6 (about N1, 842, going by the official exchange rate of N307 to $1).

This newspaper arrived at the estimated airtime spending by multiplying the underlining ARPU figure of N1,842 with active subscriber base from January to October this year, as released by the telecoms umpire.

According to investigation, with 1551 million active subscriber base on mobile networks last January, the estimated household spending on airtime stood at N285.6 billion.

In February and March, when active subscribers stood at 154.1 million and N154.4 million and with the ARPU of N1, 842, the estimated consumer spending were N283.8 billion and N284.4 billion respectively.

Also airtime spending in April, May and June were estimated at N274.8 billion; N267.6 billion and N263.4 billion when active telephone users across different mobile networks seated at 149.2 million; 145.3 million and 143 million in that order.

Further, operators also raked in N256.2 billion and N256.7 billion in July and August as declining subscribers dropped to 139.1 million and 139.4 million respectively.

By September and October, when active subscribers were 139.9 million and 140.7 million, the amount spent by these subscribers on airtime purchase were estimated at N257.6 billion and N259.1 billion respectively.

Meanwhile, the decline in subscriber base from 155 million in January to 140.7 million as at October this year has been attributed to a number of factors.

Telecoms stakeholders including the NCC and telecoms companies under the aegis of the Association of Telecoms Companies of Nigeria (ATCON) and Association of Licensed Telecoms Operators of Nigeria (ALTON), among others, have attributed the decline to a number of factors, especially the effect of over the top (OTT), the tough economic situation and the high rate of subscriber identity module (SIM) churning.

According to them, one of the major threats that have also continued to rear their ugly heads since beginning of this year is the increasing realisation on the part of telecoms companies that they are losing substantial amount of revenue to OTT platforms such as Facebook call, Skype, WhatsApp, BBM, Viber, among others on their revenue.

Already, telecoms operators in Nigeria have called on the NCC to regulate OTT but regulator has said it does not regulate technology but charged operators to be innovative.

“OTT has come to stay and the only things remaining for the mobile networks are to be innovative,” said Chairman, ALTON, Mr. Gbenga Adebayo.

He noted that with the increasing usage of data-driven OTT platforms to chat and make VoIP calls by subscribers, the number of voice subscriptions has, over the last 10 months, dropped from over 155 million to 140 million as at October, this year, representing a loss of 15 million subscribers.

“People use OTT platforms to make IP calls instead of the traditional voice calls, which is relatively cheaper for them,” he said, stressing that the drop in voice subscriptions was resulting in declining revenue for telecoms operators.

Studies by Ovum, a global tech-focused research giant, had earlier predicted that telecommunications industry in Nigeria and others will lose a combined $386 billion between 2012 and 2018 from customers using OTT voice applications.

According to an analyst at Ovum, Mr. Emeka Obiodu, “The use of VoIP will grow increasingly over the next five years to become the underlying technology for delivering voice over telecoms infrastructure.”

He noted, “blocking these services, entering into alliances, or trying to out-compete OTT players are not going to stem the tide.”



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