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Telcos lament 50% revenue loss to WhatsApp, Skype

By on August 14, 2015

The increasing takeover of calling and Short Message Service by over-the-top players, or apps, such as WhatsApp and Skype, is eating deep into voice revenue of telecommunications companies in Nigeria by as much as 50 per cent, The PUNCHhas learnt.

A report from brokerage Credit Suisse on Wednesday stated that the threat to traditional voice and messaging business of telcos in the country from communications apps, offering free calls and messaging using the Internet, was fast rising.

“Proliferation of over-the-top content services such as Skype and WhatsApp, among others, could trigger whopping 30 to 50 per cent revenue hit on Nigerian telecoms companies’ voice services in the coming months.

“Telco messaging revenues have already taken a 30 per cent hit, thanks to OTT players,” the Credit Suisse report stated.

This development, our correspondent gathered from employees at Etisalat, was forcing it and other major telecoms firms to “indirectly raise data rates to see if they can recover part of the about 50 per cent revenue cost,” which in turn was hurting broadband penetration in the country.

A senior employee at Etisalat said, “For instance, an Etisalat 260 megabytes data bundle, which costs N1,000 that should ordinarily stay for one month, now lasts just for a few hours or at best one or two days, with or without heavy downloads or uploads, but as long as the subscriber is on to heavy usage on any of the OTTs.

“This is the same case with our two-gigabytes bundle, which cost N2,000 and is meant to be used up to one month. But with the explosion of the OTTs like WhatsApp and Sype, such will just be there for a few hours or days.”

When approached, the Public Relations Manager, MTN Nigeria, Funso Aina, said, “OTT content services have a cannibalising effect on network operators’ voice and data revenue because they could provide free services, which will duplicate services already provided by network operators such as voice calls and SMS.”

He said, “A ready example often cited is that WhatsApp provides free instant messaging services as an alternative to text messaging services offered by a mobile network operator.

“It (WhatsApp) has also launched a free voice service.”

He said, “The point to note in this argument is that OTTs allow users to send unlimited texts, images, video and audio messages free of charge using their current data plan.”

According to him, the problem is that these services are provided using network infrastructure of operators but without commensurate compensation to operators.

Aina, however, dismissed the allegation that some telecoms operators had continued to dispute a view that they were making enough money from their higher paying data services to offset the loss of voice and messaging revenue.

 

[Punch]