As traditional voice and SMS revenues continue to dwindle, Sub-Saharan African (SSA) telecommunications operators are aggressively pivoting toward “entertainment-first” business models to capture the spending power of a younger, data-hungry demographic.

A new industry report by PwC, titled “Study on the level of competition in voice and data market segment of the Nigerian telecom industry,” reveals that the industry’s survival now hinges on its ability to move beyond basic connectivity and become a gateway for lifestyle and entertainment content.

The report, presented at a Nigerian Communications Commission (NCC) workshop in Lagos, highlights a major shift in consumer behavior. For Gen Z and Millennial users, data is no longer just a utility, it is the primary means of “social access.”

To stay relevant to these demographics, telcos are increasingly acting as the middleman for major Over-The-Top (OTT) platforms. Key findings include:

• Global Dominance: Telcos now facilitate a staggering 77% of all streaming partnerships worldwide.
• Bundling Strategy: By the end of 2024, approximately 20% of the global streaming market was distributed directly through telecom bundles.
• The “Lifestyle” Pivot: Operators are moving away from selling “megabytes” to selling “experiences,” integrating subscriptions for Netflix, TikTok, and WhatsApp directly into data plans.

“Telcos must design entertainment-first bundles and partner with OTTs to stay relevant,” the PwC report stated, noting that these partnerships are critical for protecting core data subscriptions and boosting Average Revenue Per User (ARPU).

This shift toward content is a defensive move against a “silent crisis” in the sector. In Sub-Saharan Africa, ARPU growth has slowed significantly, falling to just 2.25% in 2024, down from 3.07% in 2021.

With global telecom revenue growth projected at only 2.9% through 2028 well below the forecast global inflation rates of 3.7% to 5.8% operators are desperate to find new revenue streams to protect their margins.

Beyond entertainment, the younger generation’s preference for digital interaction is forcing telcos to scrap traditional service models. Physical service centers are being replaced by:

• eKYC Onboarding: Digitized registration and verification.
• Self-Service Apps: Mobile-first account management.
• AI Chatbots: Real-time support that bypasses traditional call centers.

As 5G adoption accelerates, PwC expects it to become the dominant global standard by 2026. For the African market, Fixed Wireless Access (FWA) is identified as a primary use case, allowing telcos to deliver high-speed streaming and social media content to underserved urban and rural areas without the high cost of laying fiber cables.

Culled from : The Guardian