impact of mobile services.pdf

7/29/2019 Impact of Mobile Services.pdf

1/33

The Im act of Mobile Services in Ni eria:The Im act of Mobile Services in Ni eria:How Mobile Technologies Are Transforming

Economic and Social Activities

Abuja, Nigeria

March 16, 2010


2/33

Mobile Services in NigeriaMobile Services in Nigeria

Table of Contents

Executive Summary

The transformational role of mobile services

Evolution of the industry worldwide

Development of Nigerias Mobile Market

Relevance of mobile industry in overall Nigerian economy Overview of mobile applications in social and economic activities across emerging

markets

The value of mobile services in daily lives

Financial impact on individuals

Impact on rural population

Example of local social initiatives

Pyramid Perspective

2


3/33


Mobile communications are having a positive impact in Nigeria by attracting investmentand developing various commercial activities

Executive Summary

Pyramid analyzed mobile adoption trends, examples of mobile applications as well as theperspectives of key players and 1,500 Nigerian end users. The top five conclusions of our study are asfollows:

1. Mobile services have ample reach in Nigeria and will continue to post rapid growth. Mobile subscriptions surpassed 72.6m at YE2009 resulting in a penetration rate of 50% of

t e popu at on.

Pyramid projects subscriptions will surpass 128m by 2014, creating a substantial user basefor the development of the mobile applications market.

2. The mobile industry is having a positive economic impact by generating substantialinvestment in infrastructure and employing a significant number of Nigerians.

During the past decade, approximately $16bn has been invested in projects related to.

There are as many as 3m jobs directly and indirectly related to mobile services in the

country.

3


4/33


Nigerian end users agree that mobile services have favorably influenced every aspect oftheir lives

Executive Summary

3. Nigerian end users agree that mobile services have positively influenced every aspect of, , ,

business opportunities, lower transaction costs and enhancing social interaction.

4. Around the world, Pyramid has identified numerous examples of initiatives using public andprivate un ing t at everage mo i e services in socia programs, improve t e operation ovarious vertical industries and foster connectivity in remote areas.

5. The future develo ment of the mobile market in Ni eria will be driven b collaboration

among industry players, the local government and international organizations. End users inNigeria value mobile services greatly and are frequent users of this platform, yet the availabilityof specific mobile data-based applications is still limited. Developing a set of tools andinformation s stems will re uire close collaboration amon local and international entitiestelecom vendors and operators can play a key role in importing successful initiatives to Nigeria.

4


5/33


Table of Contents

Executive Summary




Relevance of mobile industry in overall Nigerian economy Overview of mobile applications in social and economic activities across emerging

markets





Pyramid Perspective

5


6/33

Mobile Services in Nigeria

The evolution of the mobile services market around the world is driven by advances in theareas of access networks, devices and applications

Transformational Role of Mobile Services

Wider Availability of High Speed NetworksWider Availability of High Speed Networks Versatile and Affordable DevicesVersatile and Affordable Devices

Key Aspects:

Intense competition among vendors brings device

prices downwards

Key Aspects:

Declining prices for connectivity services

Improvement in key features (size, definition, batterylife, camera, etc)

Wider availability of embedded modules (WiMax, 3G)

MOBILEMOBILE

Evolution towards 3G and beyond

Shared access and coverage of rural population

Governments and NGOs supporting programs to

MARKETMARKET

Variety of ApplicationsVariety of Applications

connect schools, medical centers, etc ey spec s:

Development of User-Generated Content (UGC)

Virtual communities and cloud computingChan in atterns in entertainment drive advertisininvestment towards mobile platforms

Source: Pyramid Research

6


7/33


The global telecom market continues to grow at rapid pace, particularly in the area ofmobile services with subscriptions surpassing 4.5bn in 2009 and very important potential


going forward in the area of mobile broadband (ie. Internet) services

Global access lines by type, 2008Global access lines by type, 2008--20142014 Subscription CAGR,Subscription CAGR, 20092009--20142014

9

10

Pay-TV 1%

VoIP 20%

Fixed circuit-switched voice -3%

5

6

7

8

slines(bn)

o e roa an

Mobile voice/messaging 6%

Fixed broadband 11%

0

1

23

Acce

2008 2009 2010 2011 2012 2013 2014

7

,


8/33


Pyramid forecasts that over 55% of mobile subscriptions in the world will be using 3G+in the next three years


Mobile subscriptions by technological generation, Global, 2005Mobile subscriptions by technological generation, Global, 2005--20142014

8

,


9/33


In Nigeria, the mobile industry has developed over the past decade driven by a successfulliberalization program and the overall potential of the market


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Milestones in licensing and concessions awarded by the NCCMilestones in licensing and concessions awarded by the NCC

Newtelecompolicywasenacted.

December:

Fe ruary:

Digitalmobilelicenses

were

June:Firstnationallongdistancelicensewas

offeredto

TelecommunicationsAct2003wasenacted.

October/November:Threenational

longdistance

November:Twonationallongdistanceoperator

licenses

February:NCCintroducedunified

access

January:Anationalcarrierlicensewas

awardedto

September:GatewayTelecomsIntegrated

Services

May:NCCawardedlicensesinthe2.3GHz

bandto

four

AuctionsforGSMlicenses.

MTN,MtelandEconetWireless(later

Vmobile,

Wireless.

September:FourthGSM

opera orlicensesbecameoperative.

ecameoperative.

censes.Theseweregrantedto13companiesintotal,includin

res a eSatellite TVSystems

March:

na ona longdistancelicensebecameoperative.

opera ors,butdiscussionsarestillongoingtofinalizethe

Celteland

nowZain).

nationalcarrierlicenseawardedtoGloMobile.

All

operators

hadintroducedpersecondbilling.

MTN,Zain,

MultiLinks

and

Starcomms.Theearliest

3G

UMTS

licensestoMTN,Zain,GloMobileandAlheri

October:Etisalatlaunchedservices

issue

November:Nitels

nationalcarrierand

opera vedateforthelicenseswasJuly2006.

Engineering

July:

NCCawarded

fixednternat ona

gatewaylicensebecame

operative.

Transcorpbuys75%stakeinNitel

wirelesslicenses

9

,


10/33


Pyramid estimates that the Nigerian mobile services market has grown from 422,000 in2001 to roughly 73m at the end of 2009


Mobile subscriptions Subscription penetration

In terms of the mobilepenetration, growth in Nigerias

Evolution of mobile subscriptions Nigeria, 2001Evolution of mobile subscriptions Nigeria, 2001--20092009

40%

45%

50%

60

70

80

P

ene

lion

s)

exponential, from just 0.33% of thepopulation in 2001 to 48.7% in2009.

20%

25%

30%

35%

40

50

trationofpopulb

scriptions(mil

Intense competition, theproliferation of prepaid plans, low-cost handsets and the rapidexpansion of mobile networks to

5%

10%15%

10

20

tio

n

Mobilesu

the main drivers of growth inmobile subscriptions.

The ex ansion of covera e to

2001 2002 2003 2004 2005 2006 2007 2008 2009

underserved areas by the smallerCDMA operators has also led toincreased competition, bringingoverall communication prices

Going forward, due to intense competition and constant innovationfrom mobile service providers, a greater number of people will seeown.

va ue n an e n a pos on o use mo e serv ces. yram pro ec sthat Nigerias mobile subscriptions will surpass 128m by 2014, creatinga substantial user base for the development of the mobile applicationsmarket.

,

10


11/33


The availability of prepaid services has been a key driver of the expansion of Nigeriasmobile market; data services are only beginning to take off


Mobile market indicators, Nigeria, 2001Mobile market indicators, Nigeria, 2001--20092009

2001 2002 2003 2004 2005 2006 2007 2008 2009

Subscriptionpenetrationof 0.3% 1.2% 2.4% 7.2% 13.8% 20.9% 28.2% 43.1% 48.7%population

Userpenetrationofpopulation 0.3% 1.1% 2.2% 6.5% 12.0% 17.4% 23.3% 34.5% 37.8%

percentageoftotal

99.9% 99.8% 99.6% 99.6% 99.5% 99.5% 99.5% 99.2% 99.1%

ARPS(US$) $48.21 $47.56 $41.55 $29.94 $17.80 $13.65 $12.12 $11.26 $7.66DataARPSaspercentageoftotalARPS 0.5% 0.7% 0.9% 1.1% 2.0% 3.0% 3.5% 5.7% 8.3%Monthly

minutes

of

use

(MOU)

223 162 136 119 89 70 53 51 46

Annualchurnrate 2.0% 8.7% 18.5% 18.6% 26.8% 27.9% 48.4% 44.0% 41.8%

,

11


12/33


In US-dollar based revenue terms, the Nigerian mobile services market expanded at one ofthe fastest rates in Africa for the past decade and is the second largest in the region


Size of the mobile market, nominal GDP per capita and mobile service revenueSize of the mobile market, nominal GDP per capita and mobile service revenueCAGR, 2001CAGR, 2001--2009, Select African markets2009, Select African markets

Algeria

$3,101

Nigeria

$6,23570%

80%

1-2009

Ghana$1,093

Senegal$716

40%

50%

60%

nueCAGR200

$826

Cote d'Ivoire$1 165

Kenya$1,072

Morocco

$9,993Tunisia

$1,395

20%

30%

eservicereve

$4,742 $3,048

0%

10%

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000

Mobil

per cap a

,

12


13/33


The explosion of the mobile industry in Nigeria has resulted in a series of positive effectsacross the economy ranging from investment in networks to the creation of employment


Mobile services have multiple positive effects in an economy, most notably in emerging markets. Theireconomic benefits extend be ond the investment that network o erators allocate to license fees taxesand network equipment and include the following factors:

End user spend money on mobile telecom services and devices allows a new industry toflourish

Telecom operator spending on marketing, distribution, maintenance, training, support andnetwork enhancements create important benefits for all involved in the value chain

Mobile operators create employment, both direct and indirectly, and invest in thedevelopment of the labor force.

Mobile services have a wide economic impact in a country, since they enable end users toconduct their daily business in a more effective manner, reducing the time and cost oftransactions, improving access to markets, commoditizing information and generally allowing

businesses to operate more efficiently.

13


14/33


According to Pyramids estimates, the annual revenue from mobile services representsbetween 2% and 7% of African countries Nominal GDP; in Nigeria this ratio is close to 4%


Ratio of mobile services revenue to total GDP, select countries, 2009Ratio of mobile services revenue to total GDP, select countries, 2009

DRC

Ghana

Nigeria

Cote d'Ivoire

Senegal

South Africa

Tanzania

Cameroon

Algeria

Botswana

Kenya

0% 1% 2% 3% 4% 5% 6% 7%

Mobile services revenue as percentage of GDP

,

14


15/33


Mobile operators also contribute to the economy by directly and indirectly creating jobs toprovide and distribute their services; in Nigeria, we estimate there are as many as 3m


jobs related to this industry

There are several groups of jobs, whichcan be divided into two subgroups, that Employment related to mobile sector In Nigeria, 2009Employment related to mobile sector In Nigeria, 2009gravitate around mobile services:

The top category of indirect employment

encompasses equipment sales,infrastructure deployment, advertising,marketing and public relations as well assecurity workers involved in theprotection of base stations. Reportedly, in

,

security guards.

At the base of the pyramid, there are,

distributors, retailers, phone boothoperators as well as street vendors. The

so-called mini call centers consist ofsimply one or a few mobile phones andairtime bought in bulk from the operator.Call center operators allow other peopleto use the phone for a fee and quiteoften will take a message, also for a fee.

,

15

T f ti l R l f M bil S i


16/33


In addition, the sale of airtime and SIM cards has driven various forms of entrepreneurship


Distribution on the streets andDistribution on the streets and MTN andMTN and GloGlo points of sale, Nigeriapoints of sale, Nigeria

ource: yram esearc ,

16

M bil S i i Ni iM bil S i i Ni i Transformational Role of Mobile Services


17/33


In terms of capital investments, mobile operators in Nigeria have worked on infrastructuredeployments, network rollouts, upgrades and expansions; the investment related to


mobile services, for the past decade, adds up to approximately US$16bn

Private investment by telecom operators in Nigeria, 2001Private investment by telecom operators in Nigeria, 2001--20082008

Pyramid Research estimates that capital investments in mobile networks and operations have accounted

for 80% of total telecommunications foreign capital investments (a total of more than $12bn by the

As of March 2010, the NCC reported $18bn in telecom sector CAPEX, $16bn of which is invested bymobile operators.

,

17

Mobile Services in NigeriaMobile Services in Nigeria Transformational Role of Mobile Services


18/33


Mobile networks in Nigeria are in constant evolution; operators such as MTN, Zain and Glo,have undergone a technological migration from 2G to 2.5G and are working towards 3G


Breakdown by Mobile Technology, NigeriaBreakdown by Mobile Technology, Nigeria, 2003, 2003--20142014

80%

90%

100%

ls

40%

50%

60%

70%

otalTermina

3G+

2.5G

0%

10%

20%

30%

%of

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Note: For the purposes of this exhibit, the following categories apply:2G = GSM, TDMA, and CDMA One technologies

. , , ,3G+ r= CDMA 200, UMTS, HSPA, Mobile WiMAX, and LTE technologies

,

18

Mobile Services in Nigeria Transformational Role of Mobile Services


19/33


Additional areas where mobile services can have an important impact include rural connectivityprojects, education, health, finance, agriculture, transport and entertainment applications


Vertical Nigeria International

Rural Connectivity Millennium Village Pampaida-extend telephony services to

India: Gramjioti PilotProgram- provide mobile

hard to reach rural areas broadband connectivity tovillages and towns aroundChennai in India

ura onnec v y -train and support localvillagers to provide mobilebased pay-phone services

-and support local villagers toprovide mobile based pay-phone services

Education Ladybird Mobile ReadingProgram- support classroomactivities through mobilebased educational exercises

South Africa: Dr. Math-leverage the MXit mobilesocial platform to providetutoring services

HealthMy Question, My Answer- SMSand phone operator based

Uganda: Text to Change- SMSbased interactive quiz and

program covering theHIV/AIDS topic

HIV/AIDS topic

19

Mobile Services in Nigeria Transformational Role of Mobile Services


20/33


Additional areas where mobile services can have an important impact include rural connectivityprojects, education, health, finance, agriculture, transport and entertainment applications


Vertical Nigeria International

Finance Moneybox Africa- mobilecommerce application to

Kenya: Safaricom M-Pesa- SMSbased mobile payment and

virtually store and movemoney, make payments andenable other mobile basedfinancial transactions

money transfer platform

gr cu ure -disseminates marketinformation in conjunctionwith information points andtrade agents

Information- disseminatesmarket information throughSMS, supported by CommunityKnowledge Workers

Transport Hot FM Abuja TrafficMonitoring- Collects trafficinformation sent by listenersthrough SMS and mobile calls.

United States: OnStar- GSMbased in-vehicle security andinformation service

EntertainmentDSTV and MTN Mobile TVService- broadcasts content

South Africa: Mxit: WAP basedinstant messaging and social

20



21/33


Table of Contents

Executive Summary




Relevance of mobile industry in overall Nigerian economy

Overview of mobile applications in social and economic activities across emergingmarkets

The value of mobile services in daily lives Financial impact on individuals



Pyramid Perspective

21

Mobile Services in NigeriaMobile Services in Nigeria Nigerian End Users Perception of Mobile Services


22/33

gg

During 2009, Pyramid conducted a survey of over 1,500 mobile end users in Nigeria toanalyze the impact of mobile services in their daily lives

The sample group of our survey is representative ofNigerian society, including a combination of femaleand male participants. The research was designedto nc u e mo e users v ng n erent parts othe country, with 70% of interviewees living inurban areas and 30% living in rural areas in thefollowing regions and cities: Lagos, Abuja, Kano,Akure Kaduna Ibadan Jos Aba and Enu u. Interms of age groups, we focused the study on the16-69-year-old population.

Pyramid developed a questionnaire comprisingmostly closed-end questions. The main topics

covered in our interviews were as follows: Determinants of mobile ownership

Drivers of usage Perceived changes in patterns and benefits of

economic activity among mobile phone users

Purpose and pattern of mobile phone usage,including:

Work-related activities

Entertainment and access to

Perceived changes in work practices andnetworks of social contacts among mobilephone users

n orma on

Access to health, education, financialand logistics/transportationinformation and services

a a was co ec e v a a com na on o p one- ase anface-to-face interviews in households and high-trafficpedestrian areas.

ource: yram esearc

22



23/33

gg

60% of interviewees agreed that mobile services have positively influenced every aspectof their lives including 35% who claim that a mobile phone has dramatically improved allaspects of their lives

Q. What option best describes the impact of mobile services in yourQ. What option best describes the impact of mobile services in yourdaily life? Nigeria, 2009daily life? Nigeria, 2009

80%

90%

100%Having a mobile phone hasnegatively impacted my life

Neutral

40%

50%

60%

esponden

ts

Having a mobile phone has madesome of my daily tasks easier

Having a mobile phone hasimproved most aspects of my life

10%

20%

30%R

Having a mobile phone hasdramatically improved all aspects

of my life

0%

Male Female

, ,

23



24/33

Furthermore, more than 80% of our sample has seen financial gains from using mobileservices throu h a combination of savin on communications ex enses and eneratinadditional income by way of staying connected

. Have ou seen a ositive financial im act on our life from the use. Have ou seen a ositive financial im act on our life from the useof mobile services? Nigeria, 2009of mobile services? Nigeria, 2009

70%

80%

90%

100%

No financial benefit

Benefited from savings in

40%

50%

60%

Respondents

telecom and other areas

Benefited from additionalincome

0%

10%

20%Benefited both fromsavings and additionalincome

Metropolitan South East North

, ,

24



25/33

End users from different age groups point out the positive financial impact of using amobile phone ranges from increased opportunities to find jobs to savings in transportation

Age 46-69 Age 36-45

Age 26-35 Age 16-25

and better access to information

Q. What type of financial benefits do you derive from mobile phone use? Nigeria, 2009Q. What type of financial benefits do you derive from mobile phone use? Nigeria, 2009

Lower travel or entertainment ex enses

Lower cost than alternative comms

Better access to financial information

Make and receive payments

Better access to market information

Time savings in travel

Communicate with clients

Better ability to find jobs

0% 10% 20% 30% 40% 50%

Increased ability to sell

Mobile phone users deriving benefit

Source: Pyramid Research survey of 1,500 mobile service users in Nigeria, 2009

25



26/33

Nigerians also rely on mobile services to conduct activities related to education, healthand entertainment activities

Q. For which of the following activitiesQ. For which of the following activitiesdo you leverage your mobile phone?do you leverage your mobile phone?Ni eria 2009Ni eria 2009

Most commonly mentioned uses bycategory:

Job opportunity

Age 46-69 Age 36-45

Age 26-35 Age 16-25EDUCATION

Communicating with teachers and

collea ues

Education

Downloading information to mobile phone

EMERGENCY/HEALTH

Emergency or other health services

Transportation & logistics Calling friends, family and emergency

services

Communicating withdoctor/nurse/hospital

-

Entertainment & information ENTERTAINMENT

Listening to music/radio

0% 20% 40% 60% 80% 100%

Mobile phone users engaging in activity

Taking/sending pictures


26



27/33

In the area of work related activities, mobile services are leveraged by individuals living inboth rural and urban areas

Q. For which of the following activities do you leverage your mobile phone?Q. For which of the following activities do you leverage your mobile phone?

Nigeria, 2009Nigeria, 2009

Mobile as modem for PC Internet access

Rural

Urban

Email access

Persona organ ser (ca en ar, a arms, contacts)

Improve customer service, relationships

Accessing information

Speaking to colleagues

Increase ability to sell by speaking to potential clients

0% 10% 20% 30% 40% 50%

Respondents reporting usage


27

Mobile Services in NigeriaMobile Services in Nigeria Example of Social Initiatives


28/33

In fact, for individuals based out of remote areas, mobile services are often the sole mediaof communication and a source of added income

Rural Telephony Project startup package and aRural Telephony Project startup package and aphone lady on the outskirts ofphone lady on the outskirts of SulejaSuleja, a city of, a city of

Key Aspects of the Rural Telephony Project inNigeria

The program is a cooperation between the GrowingBusinesses Foundation (GBF), a Nigerian NGO, MTNFoundation (MTNF), which is the CSR arm of MTN

Ni eria the International Finance Cor oration IFCand a group of small communal microfinanceinstitutions (MFIs).

A startup package, provided by MTNF, includes loansthat range between N14,200 and N21,400 ($95 and

, epen ng on op ona ma er a n e pac age,

payable over a six-month period, and carry a 15%annual interest rate.

The startup packages include a Nokia phone, an MTNSIM card, an o tional antenna to boost the wirelesssignal, a solar charger, subsidized MTN airtime,promotional material. The promotional material iscomprised of a table, an umbrella, chairs, banners

showcasing call rates, a hat and a T-shirt.o a e, e pro ram as ene e , one a es

in rural and semirural Nigeria. These beneficiariesoperate in 21 of the countrys 36 states.

Source: Pyrami Researc , 2009

28


E i ti ti it j t i Ni i ill t t th l i ti l t t

Example of Social Initiatives


29/33

Existing connectivity projects in Nigeria illustrate the complex organizational structurebehind social initiatives

Rural telephony program partners and their role, 2004Rural telephony program partners and their role, 2004--June 2009June 2009

29

,



30/33

Table of Contents

Executive Summary




Relevance of mobile industry in overall Nigerian economy

verv ew o mo e app ca ons n soc a an econom c ac v es across emerg ngmarkets



Common uses of mobile services



Pyramid Perspective

30

Mobile Services in NigeriaMobile Services in Nigeria Pyramid Perspective


31/33

Going forward, Nigerian end users expect to see a wider variety of data-based applicationsin the market; in the agriculture sector, for instance, we identified interest in acombination of information and transactional services

.. What new mobile a lications would ou like to use in the future?What new mobile a lications would ou like to use in the future?

Mone transfers over mobile hone

Nigerias rural usersNigerias rural users

Education-related applications fromgovernment

Agriculture-related information

y o pay or ranspor a on ees

with my mobile phone

Local information (weather, news)

Percentage of rural respondents reporting use


31


Overall the future development of the mobile market in Nigeria will be driven by

Pyramid Perspective


32/33

Overall, the future development of the mobile market in Nigeria will be driven bycollaboration among industry players, the local government and international organizations

Key Strategic Aspects to Develop Social Initiatives Leveraging Mobile TechnologiesKey Strategic Aspects to Develop Social Initiatives Leveraging Mobile Technologies

Developing a set of tools and informationsystems will require close collaboration

Learn from initiatives established in

Organize

Local Players to Launch

Programs / Facilitate

among local and international entities

Telecom vendors and operators can play akey role in importing successful initiativesto Nigeria

Attract internationals players(Multilateral organizations, NGOs,private app developers)

Government

Government agencies may facilitatedatabases of critical info (weather,agriculture, education) to start theprogram

Secure t e co a oration o ocaindustry players (incentives, funds,grants)

towardsself-sustainability

involvement in the

promotion of theNigerian mobile market

Monitor , operate and

Set clear goals for participants

Ensure applications are available to alarge share of usersSecure addition of new partners to

application + VAS

Promote enhancements

Develop VAS

32


THANK YOUTHANK YOU


33/33

THANK YOU.THANK YOU.

Gabriela Baez

Managing Director

Email: [email protected]

Badii Kechiche

Sr. Analyst

.

PYRAMID RESEARCH UK

- -

Fax: +44-20-7560 4485

Tel.: + 1 617 871 1900

Fax: + 1 617 871 1933

33

impact of mobile services.pdf

Documents