…As telcos turn to OTT bundles, 5G to arrest revenue slide
Telecommunications operators in Nigeria and across sub-Saharan Africa are facing sustained pressure on revenues as Average Revenue Per User (ARPU) continues to decline despite largely flat operating costs, squeezing margins in an increasingly competitive market.
A new report by PwC attributes the ARPU erosion to the growing commoditisation of core telecom services like voice, SMS and basic data, alongside aggressive price competition and weakening consumer purchasing power.
The report was presented at a Nigerian Communications Commission (NCC)-organised stakeholder workshop on competition in the voice and data market segment of the telecom industry in Lagos.
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PwC noted that while operators across sub-Saharan Africa have continued to expand their subscriber bases, revenue per customer has steadily fallen since 2020, driven by economic inflation, low disposable incomes and intense rivalry among operators.
Comparative data in the report showed that sub-Saharan Africa has consistently lagged other regions in ARPU growth. In 2020, ARPU grew by 2.95 per cent in the region, compared with 28.23 per cent in Asia Pacific and 7.19 per cent in the Middle East and North Africa (MENA).
The trend persisted through subsequent years, with sub-Saharan Africa recording 3.07 per cent growth in 2021, 2.95 per cent in 2022, 2.81 per cent in 2023 and 2.25 per cent in 2024, far below gains in Asia Pacific and MENA.
Globally, PwC projects telecom revenue growth of just 2.9 per cent compound annual growth rate through 2028, reaching about $1.31 trillion, a pace that falls short of expected global inflation of between 3.7 per cent and 5.8 per cent annually over the same period.
“The industry’s core offerings which are fixed and mobile connectivity, are increasingly commoditised, limiting pricing power and squeezing margins,” PwC said in the report.
The firm observed that changing consumer behaviour is further reshaping the market, with subscribers favouring digital-first experiences such as self-service mobile apps, electronic KYC onboarding and chatbots over physical service centres. App-based account management and electronic top-ups now dominate, reducing reliance on paper recharge cards and call centres.
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PwC said data usage is increasingly tied to social interaction and entertainment, particularly among younger demographics, as platforms such as TikTok, WhatsApp and streaming services become central to daily life. As a result, operators are being forced to rethink traditional data pricing models.
“Telcos must design entertainment-first bundles and partner with over-the-top (OTT) platforms to stay relevant,” the report said.
To counter declining ARPU and protect core data subscriptions, Nigerian and global operators are increasingly bundling third-party services, including streaming platforms, fintech offerings, utilities, health and telemedicine services. PwC noted that telcos now account for about 77 per cent of streaming partnerships worldwide, underscoring their strategy to drive customer retention through integrated data and content packages.
As of 2024, around 20 per cent of the global streaming market is distributed through telco bundles, the report said, highlighting the growing role of operators as aggregators of digital lifestyle services in a saturated market.
PwC also pointed to 5G as a potential medium-term revenue stabiliser, even though adoption has been slower than initially expected. The technology is forecast to account for about 64 per cent of global mobile subscriptions by 2028 and is expected to become the dominant mobile standard by 2026, with subscriptions projected to rise to 7.51 billion by 2028.
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Fixed Wireless Access (FWA) was identified as a key 5G use case, particularly for underserved urban and rural communities, offering operators an opportunity to expand broadband access while creating new revenue streams beyond traditional mobile services.
However, PwC warned that the long-term sustainability of telecom operators will depend on their ability to seamlessly integrate lifestyle services, content and advanced connectivity into coherent offerings that deliver value beyond basic connectivity.
“Success will depend on who can move fastest from being connectivity providers to becoming digital service platforms,” the report said.
