Working Paper

OTT – Threat or Opportunity for African Telcos?

Mobile broadband and declining smart phone prices have lead to a rapid increase in Internet use.
Computer based Internet access was and still is the privilege of the few in Africa, mostly those with
formal jobs, students and those that access it in Internet cafes (Stork et al 2013). Mobile Internet
requires less skills than computer based access, it does not require electricity at home and is prepaid,
all important conditions for use by low income groups in Africa. Mobile Internet is expensive for the
poor at the same time as it is a cost saving tool. It is expensive when using the full Internet including
media streaming. It is cheap when Over The Top (OTT) services are used instead of voice and text
messages. This paper analyses quarterly prices for prepaid user baskets across 44 African countries and introduces alternative approaches to user baskets in order to measure and compare top-up bundles. Prepaid voice, prepaid data and top-ups are analysed together with postpaid offerings to
demonstrate the various strategies operators in Africa have adopted and uses case studies to highlight which strategies have successfully defended or increased their revenues.