As sub-Saharan Africa’s mobile market matures, mobile operators are facing the risk of falling into a “doom scenario” that has plagued mature counterparts worldwide: saturated markets, an uneven response to evolving consumer preferences and falling revenues.

A new report by global management consultancy Bain & Company shows that sub-Saharan African operators are already starting to experience the same headwinds that have already battered more mature markets, such as declining average revenue per user (ARPU) rates and slowing subscriber growth.

Unless operators change course, recurring mobile revenues in the region could decline as much as 5% over the next five years, the ‘Unlocking value in the sub-Saharan Africa mobile market’ report indicates.

While robust network investments, cheaper smartphones and data and a rapidly expanding population of connected youth have fuelled strong growth for the $60-billion sub-Saharan African mobile market, the environment is changing rapidly.

Market saturation and pricing wars have created “a race to the bottom”, in which operators can no longer compete based on low-cost offerings alone.

“What worked for the past ten years will not be sustainable for the next ten” the report warns.

In this emerging new landscape, mobile customers are becoming more concerned about network quality than prices, while video content, social media and messaging are steadily replacing voice for how people communicate, buy and sell goods and undertake banking activities.

In South Africa, traditional voice revenues declined by about 10% in the period 2013 to 2018, as data overshadows voice applications.

The growth from data use across the sub-Saharan African region is not enough to compensate the loss in voice revenue, despite mobile data prices being higher than in other markets.

In addition, the region’s collectively low net promoter score, which is a measurement of satisfaction and loyalty, affirms that operators are “falling short” of transforming customers into advocates.

Bain & Company, surveying thousands of mobile customers in Nigeria, South Africa, Kenya, Ghana and Côte d'Ivoire, found that customers are increasingly dissatisfied with mobile service quality.

“Sub-Saharan African telcos have responded slowly, and customers are taking note,” Bain’s report shows.

In some markets, notably Nigeria and South Africa, consumers regularly swap out Sim cards in pursuit of better networks or value.

The report’s research found that network quality is the most important purchasing criterion for mobile customers in the region, which means that investing in strong network coverage and capacity is fundamental to driving higher data-driven ARPU.

Getting more smartphones into the hands of customers will also drive up data use, according to the research.

“Mobile network operators can avoid the challenges more mature markets have experienced by focusing on their customers and adopting a strategy that elevates the customer experience over pricing and products,” Bain says.

Price alone cannot win over and keep customers.

Additional value needs to emerge from maximising customer spending.

In South Africa, one-third of subscribers use multiple Sim cards to “take advantage of cheaper prices and promotions”.

Churn is also three to four times higher in South Africa than in developed markets.

“In this market, where mobile provider loyalty is up for grabs, telcos should simplify and personalise.”

The company believes that simplifying and reducing the number of postpaid offerings, personalising prepaid offerings and delivering a ‘best in-class’ customer experience will enable operators to achieve maximum value.

“By investing in a customercentric approach, [operators] will be positioned to improve loyalty, reduce churn, grow ARPU and capture more spending even as their markets mature,” the report concludes.

Bain obtained 5 346 responses – 70% collected through in-person intercepts and 30% through online surveys – across five target countries for its research.

There were 1 116 responses from Nigeria, 1 106 from South Africa, 1 032 from Kenya, 1 074 from Ghana and 1 018 from Côte d'Ivoire.