One World Roaming Ends Customer Bill Shock

MTN Nigeria has announced the introduction of its One World service for its customers, allowing them to roam at no extra cost in 19 of MTN Group's African and Middle Eastern markets. The One World service has been in place since 2008, however, this latest iteration ensures prepaid and postpaid MTN subscribers will have mobile internet accessibility at no extra cost when visiting another MTN market. BMI believes the move will build customer loyalty among its growing 3G subscribers, while also mitigating some of the effects of interconnection cuts in Nigeria and South Africa.

In the past, MTN customers under the One World service have been charged the local rate in participating countries for voice calls, while also receiving free incoming calls. Furthermore, it allowed prepaid subscribers to top up account balances using airtime vouchers bought from any of MTN's markets. MTN Nigeria customers will be able to use mobile internet services as part of One World in 19 of the group's markets at no extra cost, in places such as Cameroon, Benin, Iran, Afghanistan, Ghana and South Africa among others but will exclude Syria and Cyprus.

One World Caters To Rising Data Customers
3G Growth. 2011-2018

Nigeria is perhaps MTN's most important market, reporting the largest customer base of any of its subsidiaries, at 56.8mn subscribers at the end of 2013 and the extension of the One World service should help to build loyalty and retain customers there. It is also one of the more developed markets in the region, with a growing 3G subscriber base contributing to a 27.2% increase in data revenues during 2013, accounting for 15.1% of MTN Nigeria's total revenues for the year. International roaming can typically result in 'bill shock' for data customers who return from trips abroad to unexpected high charges. For MTN Nigeria's 6.5mn 3G subscribers, the ability to continue to use mobile broadband services when travelling in other MTN markets will be a huge positive for brand loyalty.

The Nigerian Communications Commission (NCC) slashed MTN's interconnection rates in March 2013, from NGN8.20 to NGN4.90 for voice calls and this is set to decline further in April 2014 and April 2015 to NGN4.40 and NGN3.90, respectively. A similar decision impacted MTN's South African operations, which resulted in the Group's interconnect revenue declining by 4.4% (12.9% in constant currency) in 2013. For MTN South Africa this amounted to a 24.9% decline and a 23.0% decline in interconnect revenues over the course of the year and resulted in a 6.5pps decrease in the Group's interconnection margin to 17.7%. Given that MTN is bracing itself for further regulator mandated cuts to rates, this looks set to drive interconnect revenue further down in 2014 and 2015. We therefore see the decision to extend the One World service as a means to mitigate the loss of this revenue by encouraging data usage. Bill shock can cause customers to switch off phones entirely when travelling abroad, whereas One World will ensure that its subscribers continue to spend at normal levels.

Preventing bill shock looks to be a key concern of other African operators, as Airtel Africa announced a partnership with wholesale carrier services firm BICS in February 2014. Airtel will offer similar roaming services to its African customers as the One World service, while the BICS platform sends SMS messages to alert subscribers before they reach certain thresholds, thereby improving transparency and reducing instances of disputed bills. It also provides a managed services platform to Airtel that handles multiple interconnection and roaming relationships with different operators across a number of markets in real-time, cutting costs and creating efficiencies. MTN saw it's interconnect and roaming operating expenses increase during 2013, from ZAR13,254mn to ZAR13,816mn. We therefore see the possibility that MTN will also look to partner with managed services providers such as BICS, in order to make savings as it prepares for further interconnection cuts in its core markets.

This article is tagged to:
Related sectors of this article: Telecoms, Mobile
Geography: Nigeria, Afghanistan, Benin, Cameroon, Cyprus, Ghana, Iran, Syria, South Africa

Enter your details to read the full article

By submitting this form you are acknowledging that you have read and understood our Privacy Policy.