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African VAS market will be generating revenues of USD 45.8 billion by 2018

Data is huge, but content is king when it comes to the uptake of mobile in Africa…the greatest mobile value added services (MVAS) are those that can transform people’s lives. These types of services will provide the building blocks for operators to reduce churn, improve utilization, and drive revenues over the long term.

The contention is that the VAS market in Africa will grow at a strong compound annual growth rate of around 25% and will be generating revenues of over USD 45.8 billion by 2018, according to Insight Research Now it follows that to take advantage of this, the mobile operators across Africa are adding new VAS applications. And you might also think that it would make commercial sense for these operators to choose a single supplier for all their VAS applications.

The Insight Research estimated that recurring costs can be reduced by 30-35% by using fewer suppliers. The key drivers of this are less effort by the buyer to manage supplier relationships and delivery plus better optimized resourcing from suppliers. Where a single supplier delivers all VAS applications as part of a coherent, well-packaged solution, the mobile operator will clearly lower costs in setting up and managing supplier relationships. As the relationship deepens and the VAS supplier and mobile operator marketing and technical teams collaborate more on service innovation, the mobile operator will be able to create more services that will differentiate the mobile brand in the market or take advantage of niche opportunities for subscriber acquisition and growth.

Selecting a single supplier isn’t the only way that costs can be managed. IBM recommends that CIOs work with suppliers that can provide creative pricing structures that enable essential business transformation to continue despite severely constrained IT budgets. Whether the mobile operator will prefer CAPEX to be spread over a number of years or a licence model based on metrics that are in line with the operator’s own commercial and operational KPIs, the VAS supplier needs to offer creative and flexible commercial models that allow the mobile  operator to manage costs and the timing of the those costs.

By way of example, Jinny ViO – VAS-in-One – allows the mobile operator to source all VAS from a single provider. Cathal reckons that by using a single supplier offers two major benefits for the operator. Firstly, the operator saves up to 30% on OPEX by dealing with a single vendor and secondly the mobile operator can drive growth in both subscriber numbers and in the breadth of services that the subscriber uses with the operator.

This cost pressure is being felt by all operators and any innovation that a VAS provider can perform to alleviate cost will help the operator deliver value to its shareholders.

Willy Gerard

Regional  Director – AFRICA

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