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After 20 years of cellphone services, our fascination finally cools

The local mobile phone market is reaching saturation
On the 20th anniversary of the arrival of mobile phone services in Botswana, the telecomms regulator has released numbers showing that cellphone subscriptions are declining for the first time ever. Staff Writer, MBONGENI MGUNI reports

Natural churn, a term one would not unreasonably expect to be associated with dairy manufacturing, is responsible for recent statistics showing declining numbers of cellphone subscribers in Botswana. In most other countries, these numbers would be unremarkable, given the normal ebb and flow of the business cycle and the numerous variables that influence subscription figures, including wage growth, tariff levels and others.

Botswana is different.

From Saturday, April 25 1998 when Mascom sold its first mobile phone in the country – a Motorola Startac model 85 – a revolution began that transformed the way Batswana communicate, engage, do business and even relate with each other.

A fascination with mobile was born, with an explosion in cellphone uptake unseen elsewhere on the continent.

The number of mobile phone subscriptions exploded from that sole Startac in 1998, to 563,782 in March 2005, 2.4 million in March 2010 and 3.2 million in March 2014.

The growth has seen a curious phenomenon where a country of two million residents nearly a million more cellphone subscriptions, due to many subscribers owning one or more active subscriptions.

At some point, Botswana boasted one of the world’s highest mobile phone densities, a figure the three mobile operators expected to only rise even further as thousands of youths came of age, network coverage spread further into remote areas and prices of devices continued dropping.

However, data released by the regulator, the Botswana Communications Regulatory Authority (BOCRA) this week shows that while mobile subscriptions hit a record peak of 3.5 million in March 2016, they have been sliding since then.

By September 2016, the drop was noticeable, at 3.3 million, then 3.23 million in March 2017. By March 2018, the number of mobile phone subscriptions had fallen to 3.18 million, or nearly 10% down on the March 2016 peak.

The numbers indicate that not only are Batswana not snapping up subscriptions as fast as they used to, but they are actually dumping their existing services and focussing on fewer subscriptions.

This is what BOCRA describes as natural churn, a gradual reduction in the numbers of customers a business has. Technically known as “client churn” the phenomenon is driven by various reasons, but BOCRA reckons one in particular is at play in the local market. And the numbers will keep falling unless the operators do something.

“Operators explain the decline as natural churn as the market reaches maturity,” the regulator says in a recent brief.

“It is expected that uptake of subscriptions would lessen in future, unless there is a strategic intervention by the industry aimed at increasing demand for new subscriptions.

“Such interventions may involve introduction of totally new and innovative products that address an unserved market need.”

The decline in subscriptions flies in the face of various developments in the local market that, at first glance, would be expected to increase the numbers.

One of these is a March 2017 BOCRA directive which forced a 41% drop in Mobile Termination Rates (MTR) as well as the removal of the off-net premium.

The MTRs and off-net premium are major components of the costs mobile operators charge each other for voice calls across networks.

The impact, however, appears to have been to encourage subscribers to dump their extra subscriptions, as the costs of cross-network calls were one of the major incentives for having more than one subscription.

In addition,

higher competition amongst the three operators in the provision of data services, particularly social media packages, appears to have had the effect of encouraging subscribers to dump other subscriptions.

The smallest of the three operators, beMOBILE, has upped the ante in this respect, launching a social media package marketed as a directive alternative to those offered by Mascom and Orange.

beMOBILE, part of the Botswana Telecommunications Corporation Limited (BTCL) group, presently has about 16% of the mobile subscription market, up from 15%, compared to Mascom’s 53% from 55% last year and Orange’s 31% from 30%.

BTCL group managing director, Anthony Masunga is well aware that mobile subscriptions are reaching their ceiling at a time when beMOBILE would have hoped to push for greater market share. BTCL’s mobile network was the last entrant in the market, arriving on the scene in 2008, 10 years after Mascom and Orange set up.

Masunga says while the market is maturing, there is still room for growth in different ways.

“The market is saturated and as operators, we are stealing from each other.

“There is no scale; the subscriber business is in decline. “This does not mean there’s no potential for growth in revenue. “It’s now about mobile broadband services, which is an opportunity because internet penetration is still low. “That would represent a value-added service,” the MD says.

He adds: “People are hungry for internet and the mobile networks will provide that”.

Masunga’s assertions line up with BOCRA figures showing that while subscriptions were declining, mobile broadband subscriptions increased by nine percent from 1.4 million in March 2017 to 1.5 million in March 2018.

Mobile broadband refers to wireless internet access through smartphones, dongles and similar devices. Mascom, Orange and beMOBILE are all racing to expand their 4G networks to attract data subscriptions, in the process stealing subscribers from each other.

As the operators look around for innovations around declining subscriptions, beMOBILE is also strategising for a particular innovation it says will help it leapfrog the larger, older networks.

beMOBILE has been pushing the regulator to introduce Mobile Number Portability (MNP) as service which would allow subscribers to retain their mobile telephone numbers when changing from one mobile network to another.

Masunga says with MNP, beMOBILE could leap to at least a 30% share of the local market.

“We believe if MNP were to be introduced here, we would see a major shift and we have information on the ground to support that,” he says.

“Customers are saying they have had the same number since 1998 and while beMOBILE’s offers are good, their cellphone numbers are their businesses.

“Let’s introduce MNP so we can compete on service. Allow customers to choose.”

In the meantime, however, beMOBILE’s strategy is to tap into subscribers’ fascination with data.

“Voice will always be there, but overtime, we are seeing that voice traffic will decline and in fact, in other countries, operators are giving away voice minutes in exchange for data,” Masunga explains.

“Before the issue was between fixed and mobile telephony. Now within mobile, the shift is from voice to data.”

After 1998, the fascination with cellphones was driven by the dream of making a voice call from anywhere to anywhere. That fascination is over. The new fascination is accessing the internet from anywhere and sending data to anywhere.





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