The End of Price Competition in Nigeria’s Telecoms Industry!
In the not too distant past, major telecommunications executives have been inundated with analysis revealing that their industry would likely experience such a disruption that it may not recover from. They have nonetheless continued the business as usual practice. The usual argument has been that telecom customers are often stock in long-term plans, guaranteeing loyalty over the medium term, at least. And how this should suggest that the industry will continue as it is for some time.
At the risk of sounding too confident, it is a fact that changes in the business environment usually take time to happen, and are not exactly predictable. However, with the recent trends in the telecommunications industry, the potential fall out of the years of warning is now more eminent than before. There is perhaps very little or no time to prepare for how to face the market. Operators must now select the solutions for which they have the best depth and capacity to bring to the customer and, then commence the process of organizing their business models and organizational culture around such solutions. Regardless of the potentials, any operator assumes its business model to have in the coming years, there is now no guarantee that such models won’t be ridiculed by the speedy trend of innovation in the industry.
How has this become an imperative at the moment? Statistics coming from the industry reveal that operators have not made many efforts in their efforts at monetizing the huge direct and unavoidable access they have to a huge customer base. The struggle with network upgrades is leading operators to seek new strategies for divesting their ownership of network infrastructure in order to focus on the “core” business. Operators have also tried to proliferate into other areas in recent time, collaborating with different industries, to reach out to potential customers with services like mobile money, insurance services as well as marketing music and video. As would be expected at this time, than much earlier, when the industry was in growth mode, operators have become vulnerable to competition on price. This is not the way to go in this season.
At the minimum, over-the-top (OTT) players, providing a nearly endless range of apps and streaming content directly to consumers through the Internet, have soared their dominance, even in traditional communication services such as messaging and voice. Operators must start to look in two areas to sustain their stake in the market. First, operators will have to commence a deliberate effort to simplify their offerings. Agendas for cutting down complexity in commercial offerings and market-enabling activities need to move away from being ad hoc and ill-conceived. For instance, unnecessary complexities associated with subscribing to specific offerings and the uncertainty as to extent of use of such services by customers need to change. In winning the times to come operators will have to acquire new capabilities, which will comprise of data analytics expertise that will enable the accurate segmentation of the existing wide range of customers to guarantee the generation of maximum value from each customer.
Secondly, operators will have to commence a process of redefining their identity and positioning in the market. This will follow a strategic drilling down of existing services to a concise portfolio of traditional products and digital services. These new portfolio needs to also be compact enough to ensure that existing customer loyalty and patronage is maintained. What is even more important is the need to start to build specific reputations based on distinctive capabilities. Considering the challenges facing the Nigerian market, operators could start to position as “the quality-of-service telecom company,” “quality data services king”, “reliable mobile money telecoms company”, “most swift internet telecoms company” or king of some powerfully charged strategic identity that meets much of the need of the increasingly sophisticating Nigerian telecoms market.
Operators that are able to quickly get a grip of the above enumerated strategic areas will save themselves the hassle of crude price competition and the craze for scale which has led to an embarrassing showing of poor service quality in the industry in recent times. Suffice it to say that merges or acquisitions are not ruled out in the medium term as things heat up in the industry.