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Future of mobile
Super Contributor
‎15-05-2017 10:25 AM
‎15-05-2017 10:25 AM
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Once upon a time mobile operators made massive profits that grew at an accelerated pace. But times have changed, prices are down, SMS is almost obsolete and smart phones killed phone calls. The future is data, pure data and lots of it.

Vodacom results today highlight that future. Data revenue grew 19.7% while data traffic up 43.2%. Selling more data but at lower prices. I remember paying R2 for a MB, that's R2,000 for a GB. Now I get 2 GB included in my monthly contract with only 100 minutes and SMS (still too much) whereas two years ago my contract came with 75 MB of data.

The trick is the mobile operators need to transition to being essentially utilities selling data, lots of it at massive margin because once the infrastructure is in place data is very cheap (free?) for the carrier.

Between MTN and Vodacom MTN has more growth while Vodacom is more ex-growth, a dividend yield investment. But both are trying to resist being just utilities and we see this in the US with Verizon buying both AOL and Yahoo at an attempt at diverse revenue streams. It may work but my interest is these stocks will only be renewed once they are just a utility.

Simon

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2 Comments
Regular Contributor

Hi,

 

 

Having worked in the Telecoms industry for more than 20 years (MTN, CellC , Vodacom & MTN again) i can tell you that voice revenues will decline year on year. This will include international voice revenue as well.

Eventually Teleo operatos will become "dumb pipes" where operational effeciency will come into play. Telecom operators will have to rely on  selling data and lots of it whilst keeping operational costs to a mimimum.

The saving grace is data usage doubles about every 2 to 3 years. Most of the value added services on the data are provided by OTT players (Google , Facebook , Apple ) and telco operators don't see any of this revenue , hence my reference to "dumb pipe".

Another factor limiting growth for Mobile operators would be the rollout of  FTTH/B/C (Fiber to home/business and corporates). Once you have fiber to the home you can enable your Wi-Fi device on this Fiber access and not use your mobile data. With Wi-fi hotspots becoming more prevalant, think of free Wi-Fi at Malls, Staduims, Retial shops , coffe shops. This will also eat into data revenues. You can also make free Voice over WhatsApp calls at these free Wi-Fi spots. As more more High end mobiles come to the market and become cheaper think of how this probelm could compound voice revneues.

 

The best placed Mobile operator with 5 to 10 year veiw will be MTN as most of their businesses are in Africa where infrastructure for Fiber and Wi-Fi  is non existent  (think Nigeria , Cameroom , Uganda , etc. )Consumers in these countries will be "Forced" to use Mobile data. Though the regulatory risks is high in Africa (Nigeria fine).

 

 

 

Super Contributor

nice feedback, an I agree. Thanks