It’s been a rough ride for global telecommunications companies in recent years, and it’s not because they finally started reading their fan mail.
The telecommunications industry will lose a combined $386 billion between 2012 and 2018, the firm predicts, from customers using over-the-top (OTT) voice applications such as the market-leading Skype and Lync, both owned by Microsoft.
As this happens, Mobile revenue growth has been declining in sub- Saharan Africa since 2013 and is expected to continue its downward trend until the end of the decade—despite a fast-growing subscriber base. Much of the drop has been attributed to the use of over-the-top (OTT) messaging services like WhatsApp and Facebook Messenger. With more subscribers showing a preference to chat and and make voice calls via these platforms, there’s an “increasing cannibalization of traditional voice and messaging revenues,” according to a new Mobile Economy report by the GSM Association (GSMA) trade organization.
Services like WhatsApp and Facebook Messenger have been subject of debates by local mobile operators and regulators. Last year, Nigeria’s telecoms regulator claimed that amid diminishing revenues, OTT services overwhelm local operators’ networks and leave them with little incentive to invest and improve broadband capability. South African operators also have complained about OTT services freeloading on their networks.
Unlike in more advanced markets, phone operators in sub-Saharan Africa are still investing in adding voice users which along with SMS text messages drives the majority of revenue. The region is expected to add another 100 million subscribers in the next three years.
“They don’t pay taxes, don’t develop infrastructure, they don’t even open offices and create jobs. They are undermining our industry.” complained a senior executive at one of South Africa’s largest mobile operators, who asked not to be identified as he did not have permission to speak publicly on the topic.
This is all happening as smartphone penetration and mobile-data networks also grow—and with more users starting to use apps like WhatsApp, Messenger and Skype. Telco executives argue that to see a return on that investment, voice and SMS revenue growth will need to match or outperform previous years.
The growth in global demand is driven by a number of factors including improvements in the availability and speed of broadband networks, the growing capability and affordability of wireless devices such as smartphones and tablets, and continued dominance of social media.