Thecla Mbongue, senior analyst at Informa Telecoms

The success of value added services in Africa lies in the delivery of suitable services for all market segments.

This emerged at the VAS Africa conference in Johannesburg, South Africa, today.   Speakers said value added services had to be localised, affordable, simple and usable on even low-end devices.

Speaking at the conference, Thecla Mbongue, senior analyst at Informa Telecoms, said: “ The future of successful VAS will lie in service providers, operators and solutions providers realising it is no longer about providing leisure content to the high-end segment, it will be about delivering suitable, practical and affordable content to all segments of the market.”

Mbongue said mobile money and internet access are growing strongly across Africa, with consumers fast adopting these value added services and operators fast rolling them out to offset falling voice revenues.

Data services still contribute the minority of Africa’ s total mobile revenues, but are growing fast, with a shift in the share of the revenues generated by SMS, she said. The SMS revenue share is now declining and other non-voice services revenues are growing.

This, she said, is partly due to the fact that the price of SMSes is dropping steadily.

Mobile money a winner

Mobile money is proving very successful in countries like Kenya in terms of uptake, partly due to consumer need, simplicity of use and a strong distribution channel.

On the downside, mobile money does not generate that much revenue for operators. There are also regulatory hurdles which often delay the rolling out of services. Other challenges in the way of mobile money services include lack of consumer awareness and low IT literacy, low levels of information and lack of trust in some regions.

Over 20 markets across Africa are launching money services, Mbongue noted.

She said international remittances are a major driver of these services in Africa.

“ Can mobile money be a success story everywhere? In theory, it should, but it will depend from market to market, depending on the level of mobile penetration and operator participation.”

The mobile internet segment is expected to generate high growth, mainly because of poor fixed line coverage in many areas, as well as the declining price of smartphones,

“ Mobile internet is likely to be a success everywhere, but challenges remain in terms of device prices,” she said.

Another segment, messaging, is worthy of attention, said Mbongue. Among the most popular is still SMS services and instant messaging, especially among the youth segment.

Complexity of delivery

Ambar Sur, Senior VP at Comviva noted that disposable income available in the target group is increasingly being spent on information services, and providers need to be ready for this. There are many mature markets in Africa, with more than 60% mobile penetration in many of them, he said, and less than 20% can be considered truly under-developed segments.

“ It is more and more important to start looking to value added services as a driver of growth,” he told operators. But he said delivering the services that are needed was complex, he said, while what users demand is simplicity and ease of use.

Sur pointed out that for the success of services, especially mobile money, it was crucial to consider interoperability of systems and devices. Interoperability would allow for bigger margins and uptake, he said.

Devices dictate service

Gary Trahair, senior manager portals at MTN Group, noted that it is difficult to offer products and solutions that are suited to the whole market.

For example, there are a mass of entry level devices, “ where most of the money is sitting if an operator wants to get into the high volume game” . 

While there are a growing number of smartphones in the market, the mass market is still at the entry level device, he said, and services in Africa need to be customised accordingly.

He said MTN also aimed to expand into the mobile applications market.

Rupinder Goel, CIO of Airtel Africa told delegates Nigeria is the biggest market in Africa for the company, with the need for VAS growing fast there. He said there were challenges for operators across Africa, including meeting local needs with local content and understanding local needs for services. Products and services had to be customer-foused, he said.

The VAS Africa conference continues tomorrow.

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