Mobile network operators need to adopt content-intensive strategies because “over-the-top” (OTT) services will continue to impact their average revenue per user (Arpu) negatively.
Cell C has responded to these threats by hosting mobile virtual network operators (MVNOs) like FNB Connect on its network, dramatically improving client acquisition rates and revenue growth, while forming partnerships with OTT content providers rather than attempting to slow their growth. This strategy seems to be catching on, with MTN now expressing an interest in hosting MVNOs.
Naspers is actively searching for mobile operator partners to launch its video-on-demand services across Africa. But why stop there? Naspers has an unassailable advantage in terms of content production, be it news, sports, entertainment or e-commerce. This is the sort of content that could see Arpus among mobile operators rise dramatically, and makes Naspers a leading candidate for a content-based MVNO servicing the whole of Africa.
The plethora of content Naspers could provide through an MVNO service would have mass appeal, and currently faces no direct competition. Content could be viewed through once-off payment models, monthly subscriptions to specific content and channels, or a premium package including all content.
By staggering content packages, Naspers could maintain demand across various income groups, and is sure to counter the effects of diminishing clients in the pay-TV sector; all while the host mobile operator benefits from an increasing client base prone to data-intensive activities.
Furthermore, Naspers can use its new platforms to promote e-commerce, particularly with its partner Takealot.com, enhancing the geographic reach of one of Africa’s leading online retailers.
Launching services across Africa is a daunting task with many challenges. However, no organisation is more prepared to face these challenges than Naspers.
The first notable challenge is the cost of data in Africa, which discourages the use of data-intensive activities among subscribers. Naspers would mitigate this challenge with relative ease as it has two major competitive advantages.
The first response would be to allow for third-party advertising on the Naspers MVNO platform, as this would notably be premium advertising space, allowing for targeted advertising using big data analytics, thereby increasing its value. The revenue generated through advertising space could be used to subsidise client network costs.
A second strategic move would be to acquire an African content producer like Tuluntulu that is geared towards low-bandwidth mobile video streaming.
A final challenge will be speed to market. Naspers is accustomed to launching products and services internationally. However, reaching the African mobile market is the expertise of MTN. MTN is searching for an MVNO to host to improve turnover following a challenging 2016. Hosting a content-intensive MVNO, powered by Naspers, is sure to improve the ailing mobile operator’s bottom line.
Naspers is well positioned to dominate the African MVNO space, driving demand through various forms of premium content. It is a sector where it is a prominent global player and the undisputed leader in Africa.
- Mauritz Venter is an ICT research analyst at Frost & Sullivan
