The fact the voice revenues have been on the downward trend is not news. What is news is that some telcos have not realised this or have not taken decisive strategies to look for other revenue streams.
The era of voice contributing over 90% of a telco’s revenues is over. No matter the number of new voice plans launched will change this fact. Subscribers have found out other ways to communicate. Over-The-Top (OTT) technologies have inflicted a deep incisive cut in the voice revenues. OTT service providers deliver audio, video and other media over the internet and bypass the traditional operator’s network. The OTT players do not need any technology partnerships or affiliations with network operators to operate or provide services.
Spirit DSP, in its report “The Future of Voice”, has also studied the impact of OTT VoIP (Voice over Internet Protocol) applications on voice revenue. According to the report, the overall global telco voice revenues (including fixed subscriptions) will decline from $970.4 billion in 2012 to $799.6 billion by 2020, at a CAGR of 2.4%. Also, as a result of VoIP by 2020 the telecom industry worldwide will see a loss of revenues approximately worth $479billion which accounts for 6.9% of the total revenue from voice.
Telecoms operators need to react or die.
Here are some of the ways some telcos can address the downturn in voice revenues:
Introduce cheaper voice plans – This is a No! No!. You are only eroding your revenues as this is not a long lasting strategy to fix this issue.
Partner with the regulatory body to block the OTT operations -While this is temporary, it is also not a long lasting solution. It also needs the co-operation of all the telecom operators and the regulatory body. It negates the spirit of free enterprise and it will ultimately limit the revenue-generation possibilities for an operator through increased data usage. Etisalat in UAE has adopted this strategy.
Push more money into promoting voice products – This is also money down the drain. Promoting voice products to underserved markets is also a temporary measure.
Accept and partner with the OTT service providers to launch new data-driven products – Since telcos know that these OTT technologies have come to stay, they need to co-operate and make the best use of the limited time. Telcos can bundle some of these OTT services with data plans. However the telcos should be careful in the kind of relationships they enter. For instance, a service like Facebook Zero can be detrimental to the telcos on the long run. Though the posture presented by the technology company is noble, it opens the telco’s infrastructure and database to the technology company and this can be used against the telcos later on.
Focus on increasing the contribution of Value Added Services (VAS) revenue to the bottomline – As you know the death of traditional voice revenues is inevitable, companies need to focus on increasing the revenue contribution of value added services i.e. non-voice revenues. The companies should seek mutually beneficial revenue share relationships that will endear these VAS providers to them.
Enter into new businesses that will bring in new revenue streams – This is the best option that I see. In as much as you know that the death of voice revenues is inevitable, it is wise to start looking at new ways of making money. Two companies I must commend that have done this are Safaricom and MTN Group. These companies have been investing in new businesses that will create revenue in the near future – Safaricom in Little Cab, MTN in Jumia e.t.c.
