CONNECTED CONSUMER SURVEY 2016: MOBILE SERVICES AND DEVICES IN SUB-SAHARAN AFRICA

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1 analysysmason.com RESEARCH SURVEY REPORT CONNECTED CONSUMER SURVEY 2016: MOBILE SERVICES AND DEVICES IN SUB-SAHARAN AFRICA KEREM ARSAL and ARIS XYLOURIS Analysys Mason Limited 2017

2 About this report This report focuses on aspects of Analysys Mason s Connected Consumer Survey that relate to the behaviour, preferences and plans of smartphone users in the Sub-Saharan Africa (SSA) region. In particular, it focuses on respondents usage of mobile services and devices. This part of the survey was conducted in association with On Device Research. The research was conducted in August and September The survey groups were chosen to be representative of the mobile- Internet-using population in the region. We set quotas on age, gender and geographical spread to that effect. There were a minimum of 1000 respondents per country, and 4000 respondents in the region. KEY QUESTIONS ANSWERED IN THIS REPORT How strongly do operators perform as smartphone sales channels, and how does their performance relate to consumers choice of tariffs? What is the average consumer spend on handsets and how can operators capture a larger share of this spend? What impact does 4G have on mobile users spend and engagement with their smartphones? What is the effect of 4G on customer satisfaction in terms of data speed and data allowances? Ghana GEOGRAPHICAL COVERAGE Nigeria Kenya South Africa WHO SHOULD READ THIS REPORT Operator-based strategy executives and marketing managers who are interested in understanding consumer market trends, the role of operators as smartphone distribution channels, and the impact of differing approaches to pricing in the market. Market intelligence and research executives in service providers that are responsible for understanding end-user trends and supporting business units in identifying and addressing new opportunities. Equipment/device manufacturers and software providers that want to identify end-user trends in service and device usage and help their operator customers to improve their ability to address market opportunities. Analysys Mason Limited

3 Users of sub-usd100 handsets have relied slightly more on operator channels; their mobile service satisfaction levels varied by country Figure 8: Mobile service NPS by handset price, Figure 9: Percentage difference of average data usage between sub-usd100 device users and market average, prepaid-only, Questions: On a scale from 0 10, how likely are you to recommend your mobile service provider to friends or family members?, n = How much did you pay for your handset ; How much mobile data do you use each month?, n = For mobile operator channels, the share of sales for sub-usd100 handsets is almost the same as that for more expensive smartphones. This means that, despite their low price points (which would mean easier one-time payments at retailers or grey markets), this category is effective at attracting consumers to operator stores. Customer satisfaction for mobile services can be affected by the quality of the handset being used. In an analysis of the sub- USD100 handset users, we found notable mobile service NPS differences across countries, which suggests that the consumer response to these low-cost devices are not uniform in the region. In Ghana, sub-usd100 handset users reported much lower NPS than average; in Nigeria, the opposite was true. 3 (see Figure 8). The miscellaneous others categories accounts for 47% and 25% of the sub-usd100 handsets in Ghana and Nigeria, respectively. 4 We believe that customer dissatisfaction on mobile services is more closely related to the size of this category than that of established low-cost brands, such as Tecno and Infinix (see slide 11). Unsurprisingly, sub-usd100 handset users use far less mobile data than the market average: in all four countries analysed, prepaid data usage for this category was lower than the prepaid market average data usage (ranging between 32% and 45%). 3 On the next slide, we focus on two brands, Tecno and Infinix. These two brands account for 16% of our total sub-usd100 sample across Ghana, Kenya and Nigeria. 4 The others category includes devices that fall outside the 21 brands explicitly listed in our dataset. Analysys Mason Limited

4 LTE roll-outs and increased network capacity is lifting overall customer satisfaction in South Africa Network improvements are having a positive impact on customer satisfaction across all operators. Figure 19: NPS for mobile operators by type of technology used, by year and region 2 In 2016, increased coverage and network performance had a positive effect on customer satisfaction. NPS for 4G customers increased to 6 in 2016; an increase of 8 points over Vodacom achieved the highest overall NPS score, including among its 4G customers. Vodacom reported the highest network coverage in South Africa, and its clients were the least likely to churn due to network issues (26% of reported churn reasons). Cell C s NPS of -2 is an improvement over its 2015 score. Cell C s price positioning as a value-for-money operator was the key driver. Cell C has also invested considerably in both 3G network improvements and LTE roll-outs outside Gauteng and Durban, expanding its coverage and improving network performance, lifting customer satisfaction for both 4G and non-4g customers. MTN customers were the least satisfied among major operators, assigning it an NPS of -9. However, we believe that this was not due to network issues. MTN s 4G customers are more satisfied than its non-4g customers. Moreover, MTN customers cited network issues much less frequently as a reason to churn than did Cell C customers (34% and 66% of responses, respectively). The key concern for MTN customers is that pricing 2 does not seem to match their service performance expectations. 1 For more information, see Analysys Mason s recently published Connected Consumer Survey 2016: mobile churn and customer satisfaction in Sub-Saharan Africa. Figure 20: NPS for mobile operators in South Africa by type of technology used, Questions: How much mobile data do you use each month? ; Do you have a 2G, 3G or 4G mobile service? ; n = 875. Analysys Mason Limited

5 CONTENTS EXECUTIVE SUMMARY HANDSET CHANNEL DYNAMICS 4G USAGE AND MONETISATION METHODOLOGY AND PANEL INFORMATION ABOUT THE AUTHORS AND ANALYSYS MASON Analysys Mason Limited

6 About the authors Kerem Arsal (Senior Analyst) is a key contributor to Analysys Mason's Mobile Services research programme, which helps operators to understand, and monetise to maximum efficiency, the interplay between voice, messaging and data services. His work involves in-depth coverage of issues such as customer retention, mobile data pricing, MVNO strategies, and the impact of regulation and roaming. Previously, Kerem was a research manager at Pyramid Research, where he was responsible for setting the thematic research agenda across multiple tracks and regions. He also headed numerous projects around operator strategies, as well as commercialisation of, and demand assessment for, new products in the consumer and enterprise segments. Aris Xylouris (Analyst) is a key contributor to Analysys Mason's primary research for the Consumer and SME Services research practice, and manages our Connected Consumer Survey and Consumer smartphone usage series of research. His work involves in-depth coverage of issues such as consumer behaviour, convergence and bundling, TV and media, and mobile and fixed service pricing. He also specialises in statistics and primary research analysis. Analysys Mason Limited

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