Nigeria’s mobile data prices are finally starting to come down – Quartz Africa

Africa’s mobile internet market has grown steadily over the last decade and new forecasts show mobile data revenue, will double over the five years to 2019—topping $22 billion. On the other hand, mobile voice revenue, though still significantly higher ($50 billion in 2014), will only grow by 10% in the same period. It means the continent’s telecoms operators will likely intensify efforts to grab more mobile data market share in coming months.

In Nigeria, the continent’s biggest mobile market, the race for more mobile internet users has already kicked off with a shift in telco marketing strategies away from voice minutes to data package offers. And with this has come a sharp drop in mobile data prices.

Nigeria’s internet usage numbers has grown rapidly in the last few years and is now pegged at 92 million, down by a few million owing to a recent sim card registration exercise that cut off unregistered users due to security concerns.

Over the course of the last month, the country’s leading mobile operators have announced cuts in mobile data prices. The price cuts were primarily made possible by the deregulation of the data prices by the Nigerian Communications Commission last October when the regulator announced a removal of a data floor price, leaving telcos to set prices as low as possible.

Once the regulators removed the artificial floor the Nigerian market was always likely to follow a similar trend seen in the United States and Europe with data eventually becoming a far valuable proposition for mobile operators than voice. But cheaper mobile data is likely to have a far more significant impact in a country with very low fixed line broadband internet penetration.

There’s also a theory that the sharp drop in data prices has also been prompted by increased competition between internet cable companies in Nigeria. “Wholesale data has gotten cheaper thanks to the competition among submarine cable companies,” says Ismaila Sanusi, a Nigerian tech blogger. “At some point, the only options for getting internet data in and out of the country was the West Africa Submarine Cable or a pricey direct satellite link. Now you’ve got other options alongside the old ones all jostling for customers.” Sanusi believes the net-effect of this has been cheaper data.

The mass adoption of over-the-top (OTT) services like Facebook and WhatsApp by the Nigerian market has also been great for business. Despite increased talk of regulation of OTT services for “freeloading” telcos’ infrastructure and eating into mobile voice revenue, mobile operators recognize the potential of these OTT services to grow mobile data revenue.

Nigeria is Facebook’s biggest African market and only Egypt registered more tweets than Nigeria in 2015. As a result of the popularity of these apps which offer both messaging and voice services, telcos have created specific plans for various OTT services “as a means to lure customers in and then up-sell them to full plans once they get hooked,” says Sanusi. Some have even offered special packages for Netflix users.

Amid falling prices, the strategy will not be any different. By making mobile data cheaper than it’s ever been, telcos are hoping to gain more users who might later upgrade to more expensive plans.

The hope is that the trend catches on in other African countries as a PwC report shows mobile data prices need to drop significantly as only 43% of the world can afford 500 megabytes per month.

In fact prices in Nigeria need to drop by 97% to become affordable for the majority of the country’s 180 million people. With the price for 500 MB of data in Nigeria falling 50% in the last month alone, it appears Africa’s biggest mobile market could be on its way to meeting that target.

Yomi Kazeem – Quartz Africa

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