Telcos suffer data subscribers decline
Data subscribers of the six active telecom operators in the country is dropping, as three new 4G LTE (long-term evolution) players prepare to launch relatively superior data services this year.
Telco subscriber base figures published by the National Communications Authority (NCA) from January to November 2013 shows that out of a total of 27, 665,572 mobile cellular subscriber in the country, only 9,763,581 are data subscribers, representing 35.3% of the total.
The remaining 17,901,991, representing 64.7% of mobile subscriptions are non-data customers, who either use feature phones, which do not have the capabilities to access web-based services, or they use smartphones but are unable or unwilling to access web-based products and services. This majority also do not use data devices such as modems and mi-fi.
The figures also show that between May and June, data subscriptions grew from about 9.37 million to 10.48 million. It then dropped marginally to 10.34million the following month, increased to about 10.6million in August, which was the highest for the year.
The figure has since been dropping month on month from then on till it reached about 9.8million in November. That is a 7.6% decline in total over a three month period.
But the month on month reduction figures show there was a reducing rate of decline. Between August September the reduction rate was 3.6%, then between September and October it declined by 3.2%; and the rate further reduced to 1% between October and November.
The distribution among telcos shows the decline was largely driven by a consistent reduction in the data subscribers of MTN. The market leader’s data subscribers reduced consistently over the three-month period from 6,053,183 in August to 4,624,583 in November. This is a whopping 1.43million, representing 23.6% reduction in data subscriptions on MTN alone.
Expresso also recorded consistent reduction in data subscribers between September and November to reach 41,205 data subs. Its highest number of data subs for the year was 48,932 in September.
Airtel, Glo and Tigo only experienced marginal decline in data subs between October and November, while Vodafone was the only telco that recorded a consistenT increase in data subs all year round. But Airtel chalked the highest rate of increase between September and October, from 1.27million data subs to over 1.92million, representing a 51.61% increase in one month.
So the league table shows MTN is sitting on top with over 4.6million data customers, followed by Airtel with over 1.9million data subs, then Tigo with 1.55 million data subs. Vodafone is fourth with 1.36million, Glo is next with 279,054 and sole CDMA player, Expresso has some 41,205 data subs.
But the overall decline in telcos data subs comes at a time when their voice revenues are fast declining and the telcos have declared their intentions to look for more revenues in the data market. Indeed, recently some of them were forced to increase both voice and data tariffs.
All the telcos have for some time now been driving data consumption through several data packages, because they all admit voice is becoming increasingly unprofitable and is likely to get to a point where telcos would have to offer free voice services to remain competitive. Global industry analysts have given five years for that to happen.
MTN Ghana in particular, has been organizing an annual iFest (Internet Festival) every September to promote internet use through public education and engagement with various sectors of the economy. But its data customer base is suffering the biggest dip.
It is not clear why the telcos are suffering the decline in data customers, at a time when they are supposed to be driving data consumption to shore up their fast dwindling revenue margins. It could be price, public reaction to poor services, or simply lack of interest from the consumer’s side
4G LTE is coming
The telcos woes are however coming at a time when three more players are warming up on the sidelines to enter the data market with what could be more superior data services on the back of a more advanced technology, 4G LTE.
The LTE licensees, Surfline Ghana, Blu Telecoms and Goldkey Telecoms have licenses which require them to launch by close of November this year. Surfline has announced it would launch first quarter of the year, ending March 2014, while the others are also gearing up to launch later in the year.
In terms of technological advantage, 4G LTE gives 10 times faster speeds than 3G. And all the six existing telcos are stuck with 3G until they decide to join government’s 4G LTE project.
The LTE players have said they are fully aware that the natural superiority of LTE of 3G could be adversely affected by a bad network infrastructure, so they are each setting up what they describe as very solid and reliable data centres, distribution networks (masts) and billing systems to support great customer experience.
One of the LTE players, Blu Telecoms has declared its intention to strategize around consumer advocacy rather than just having a purely commercial interest. The plan is to provide affordable but superior service.
“We will keep our prices at the same level as that of the 3G telcos even though our technology is way superior,” a Blu Telecoms official said.
The LTE players face the challenge of the negligible LTE device penetration in Ghana. But they have announced plans to focus on modems and mi-fi devices to drive data consumption on the LTE platform.
They also face the challenge of consumers waiting until after five years when they have voice services.
A phone user told Adombusiness “I do not see myself going to buy a 4G LTE device which does not allow me to also make voice calls. There is no sense in this five years wait before LTE players can do voice.”
The LTE players also acknowledged the need for more education on the several uses of the internet beyond social media browsing. They have announced intentions to promote online shopping, online live TV and video viewing at high speeds and affordable rates.
Smartphone vrs Dumbphones
Meanwhile, the data penetration, plus the level of mobile data subscriptions in Ghana also give a pointer to the dichotomy between smartphones and feature phones penetrations in the country.
Handset franchise holders and phone dealers in the country have confirmed to Adombusiness that feature phones have a bigger market share than smartphones particularly because smartphones are expensive.
Chairman of the Phone Dealers Association, Joseph Agyemang of Joe Agyengo Ventures said feature phones sell faster than smartphones because “smartphones are expensive and majority of Ghanaian do not need many of the smartphone features.”
He also noted that feature phones, which have radio on them, sell even faster because people tend to use their phone for calls and for listening to radio more than anything else.
Key Account Manager of Alcatel Onetouch in Ghana, Robert Oduro noted that industry research has revealed that web chart app “Whatsapp” is a major attraction for even smartphone users in Ghana, so even a feature phone with just “Whatsapp” is a hot cake.
“This is why the Nokia’s Asha feature phones sold massively in the emerging markets, because Nokia has a special deal with the owners of ‘Whatsapp’ and that drove the sale of its feature phones massively,” he said.
Oduro said it is expensive to sign a separate deal for ‘Whatsapp’ outside of the Google Play Store (android market), and that is why most handset manufacturers are stuck with the full Android market for smartphones, even though lots of people do not use all the applications.
He also acknowledged the rise of new chat app Telegram, saying that could be another selling point for any feature phone maker who signs a deal with makers of the app.
But Adombusiness is aware some new entrants into the telecoms market are considering driving higher data consumption by introducing more affordable feature phones with Whatsapp and or Telegram. Some telcos tried feature phones with the Facebook feature, but it did not work.
Meanwhile, despite the fact that feature phones penetration is higher than smartphone penetration in Ghana, global mobile phone shipment figures from International Data Corporation (IDC) indicate smartphone shipment outstripped feature phones for the first time in 2013. More than 51% of all phone shipped across the world were smartphones last year.
This is corroborated by a similar report from telecoms industry Analysts Garner, which also said smartphone sale hit 225million as against 210 million feature phones sold in 2013.
This according to IDC officials, was a clear indication that globally, people are fast moving away from using their phones for just calls and text messaging to browsing and doing more online stuff.
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