Operators fret as legacy voice revenues go into reverse

Voice revenues generated by South Africa’s mobile telecommunications operators are sliding, the latest figures suggest.

And driving the decline, at least in part, are voice-over-IP apps like WhatsApp, which consumers are turning to as a more reliable way of making a phone call, especially during load shedding when fibre networks tend to be work better than mobile services.

In recent months, mobile operators have taken advantage of less intense load shedding by offering specials and discounts in an apparent effort to regain lost ground.

MTN Group said on Tuesday that outgoing voice revenue in its South African operation declined 12.8% year on year to end-September 2023. However, quarter on quarter there has been an improvement in the rate of decline: in the first quarter, voice revenue slumped 16%, followed by an 11.7% decline in the second quarter. The trend is still sharply negative, however.

The slowdown in the rate of decline may be due to the easing in the intensity of Eskom’s power cuts in recent months, coupled with MTN’s significant investment – running into billions of rand – to ensure its base stations continue operating when there’s no grid-supplied electricity. Rival Vodacom has made similar investments.

In its financial update – for the third financial quarter ended 30 September –MTN attributed some of the resilience in voice revenue to its XtraTime personalised airtime advance feature, which grew by 26.2% in the third quarter.

Commoditised

But MTN’s recently launched SuperFlex bundles have turned voice calls into a commodity: unlimited on each subscription plan, where users simply choose how much data they want. It starts at just R299 for unlimited calls and texts and 10GB of data.

MTN is not alone in its struggle to save its ailing voice business.

Read: WhatsApp calling nightmare for SA’s mobile operators

In its 2023 annual report for the year ended 31 March, Vodacom identified “adopting pricing strategies to counter declining traditional voice revenue and migrate voice to data” as a key mitigating action against what against what it categorised as a principal risk to its operations.

Despite its efforts, group CEO Shameel Joosub confirmed recently that the negative trend in voice revenue growth continued into the first quarter of Vodacom’s new financial year.

“The trend of declining voice in high single digits is continuing. We have put a number of measures in to try and improve the voice part, but the acceleration of data growth has [countered] that,” Joosub said in a call with analysts in July to discuss the quarterly results for three months ended 30 June. Vodacom is due to report its interim results for the 2024 financial year next week, where it should provide an update on the performance of its voice business.

Meanwhile, VoIP-based WhatsApp, which is owned by Facebook and Instagram parent Meta Platforms, continues to grow its calling capabilities, having recently added group voice and video calls to its list of features.  — (c) 2023 NewsCentral Media

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