1.5 Billion New Mobile Users, at $5 a Month

Over the next five, years, 1.5 billion new mobile subscribers will be added to subscriber rolls, says Andy Kitson, Juniper Research (News - Alert) analyst. And key to many of those new accounts is a mobile phone cost of ownership no higher than $5 a month. That means cost-optimized handsets and use of prepaid payment mechanisms.

 

It may also mean lowering regulatory fees and licenses, reducing or abolishing sales taxes and import duties and tariffs, plus taxes on value-added services, says Kitson.

 

So far, five countries had managed to reduce handset total cost of ownership to $5 per month level, including Bangladesh, India, Pakistan, Sri Lanka and Ghana.

 

A study published by the National Communications Authority in Ghana found that average cost per user had reached $5 per month by March 2009. This includes voice and data usage as well as the costs of interconnection fees resulting from incoming calls. 

 

Market leader MTN (News - Alert), with 54 percent of subscribers, had the highest ARPU, at around $8. It was followed by Millicom-owned Tigo, 23 percent of subscribers, with $5.30, Kasapa, with three percent, or $4.70, and Zain (News - Alert) with seven percent, or $3.

 

Vodafone (News - Alert), with 13 percent of subscribers, has not reported ARPU for its Ghanaian operation for some time, but its predominantly prepaid offering suggests that its ARPU would be similar to that of MTN and Tigo, says Kitson.

 

Zain’s ARPU is very low mainly because the company launched in December 2008 and was offering mainly low-priced introductory service packages during the period in question. Glo, the country’s sixth mobile operator, licensed little more than a year ago, launched services in April.

 

Prepaid services are key in getting consumers onto the network in the first place. Revenues and ARPUs will be low, initially, but over time, as consumers get more familiar with and dependent on their devices, consumption of more lucrative value-added services will increase, says Kitson.

 

For as long as I can remember, policy advocates have struggled for answers to “wiring the unwired,” getting plain old telephone service out to the multitudes. Now, mobile providers are just doing it. It's huge.

 

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