The Telecommunications Market in Cameroon in 2015: Analysis of Key Figures and Findings


This presentation contains figures on the performance of the operators.   Although we believe that the presentation is based on official figures, they are subject to numerous changes due to currency convertibility at the time of the publication of reports and analyses.

General Overview

The year 2015 in several economic sectors was generally difficult for secular players in several sectors namely telecommunications, agro-industries and hydrocarbons.  This difficulty was felt by a GDP variation from 5.5% (2014) to 5.2% (2015); coupled with a change of the inflation rate by 0.8%, which has impacted consumption as a whole. In addition, the war due to the unrest in Northern Cameroon has severely impacted the economy and consumer industries which, for some, have lost nearly 40% of market share.


Telco in Cameroon: Cutting Edge of Its Evolution in Cameroon

Generally, there has been a variation of at least, 4% among the Telco operators with the accumulated turnovers of the two operators namely MTN and Orange between 2014 and 2015. This, thus, confirms the difficulty of the year despite the launch of the 3G technology which has contributed nearly 14.2% of total income, that is, almost 32 billion for MTN.  Specifically, the Telco year in Cameroon was marked by several challenges:

  • Double launch of the 3 & 4 G technologies and the renewal of licenses that have induced new business offers and business models.
  • Competitive pressure from the third operator pushing other operators to reinvest in urban and rural network coverage and quality.
  • Managing the outsourcing transition of technical jobs undertaken by operators to better focus on the core of their business.comparatif arpu user


MTN Remains the Market Leader

MTN remained the Leader in market share while recording a drop of 6.5% on its turnover and a drop of 5% on the number of subscribers. Furthermore, MTN also registered a drop by 12 pointson market share; following the 2014-2015 rating scale of Media Intelligence. Also, despite the drop in EBITA (Income before Interest, Dating Imports and Amortization) from 42.8% to 36.2%, MTN Cameroon still remains extremely important for the African arm of the Group. In addition, the above challenges can also be explained by the investments made on the qualitative and quantitative expansion of the network and development of new technologies.


Orange Increases Its Subscriber Base

Orange recovered growth (customer database). This is seen via the "subscriber database" that has grown by 14% thus, it gained market share by 3 Points following the rating scale Media Intelligence. Its turnover in 2015 experienced a near stabilization (- 0.4%, that is, nearly - 655 960 000 FCFA). However, the 3rd and 4th quarters seriously impacted growth by a net loss of (- 6.55% in subscribers and - 2.78% ARPU) in 4Q15. An almost similar situation at MTN with reference to its launch of the 4G technology, eight months after launching the 3G.


Nexttel, Best 3G Network Quality and Coverage

Nexttel, on its part, did not publish any information to suggest any contrary tends vis-a-vis the other operators. It published an unconfirmed result of 3 000 000 subscribers in 4Q15, which was expected based on internal forecasts in 2Q15.  However, it is still important to point out the great 3G coverage and quality of Nexttel in Cameroon. It is worth noting that 96% of Nexttel subscribers have more than two SIM cards. Thus, 1/6 subscribers had three SIM cards (one for MTN, one for Orange and the last for Nexttel). This rendered the market very unstable, especially for the Prepaid.




Data: A Point of Contention at MTN

At MTN, we noticed a 66% growth in Data (mobile money, mobile internet etc.), which increased from 8.2% (19.60 billion) as contribution to the total income in 2014 to 14.2% (32 billion) despite the limited 3G coverage.  Nevertheless, we noticed a decline in Voice by 12, 5% which according MTN, is due to the network quality.  Notwithstanding, the 2014 performance was based on Voice and Data, and supported by segmented offers which targeted the youths and High-Value-Consumer clients. This clearly illustrates the outcome of changing business models.  It is worth noting that, despite the huge drops in number of subscribers (5%) ARPU (1.25%) and outgoing calls (12%), the drop in turnover remained within reasonable proportions (6.25%) compared to 2014. We believe that this change in business model and offers, which is the development of Data, always affects Voice from the providers standpoint (OTT) who use WhatsApp, Viber and Facebook to enable customers make calls through these services. This has a serious impact on Voice in African countries. In addition, MTN's growth business model was to increase its customer database in order to entertain the hope of registering more calls through its network or on its network.


Orange, Leader of the Data

At Orange, nearly 10% of customers had compatible Data terminals in 2015. In addition, Orange was the leader of the Data market in 2015 in Cameroon with 55% of market share.   Its strategy was to win-over the Anglophone regions (Southwest and Northwest) by offering free calls to new customers. This strategy greatly impacted the ARPU which for the first time, dropped by 4.5%, that is, XFA 2300 / month due to the discharge fees. We noticed changes on the business models which no longer, only require the quantitative development of the subscriber database but also, and especially, the development of services related to new services created by the Data.comparatif mobile money bundle


And Why Absolutely the 4G ?

Orange, in its annual report, announced nearly 700 000 subscribers using compatible (3G and 4G) Data terminals. This amounts to 10% of its customer database and an increase of 5 Pts compared to last year. Within the 10%, one could estimate that the ratio of compatible 4G stands at 30%.  This 4G compatibility usage, which is slightly low at MTN, somewhat sheds some light on this segment in Cameroon.  However, this segment alone, which represents a minority in terms of number, is able to raise almost 50% of the turnover.

Therefore, it is easier for Orange to apply differential treatment and get to know these customers closely. The purpose is to maximize the satisfaction and eliminate churn (the customers constitute the bulk of the profits and Orange can not afford to lose them or to let them be taken!). If we refer to MTN Cameroon, who despite the limited 3G coverage, managed to contribute nearly 32 billion to its total income in 2015 via Data, and at a time when it was not the market leader, its performance can help one understand MTN's real motivations to absolutely upgrade to the 4G, just months after the launch of the 3G: 

  • To start, the 4G would allow MTN to challenge the Data leader (Orange) on its favourite High-Income-Revenue customers segment in order to destabilize its leadership in the Data segment. It is worth noting that this 4G advantage enables Orange to play with the low and middle income client segment by providing quite competitive offers and tariff plans (permanent Prepaid segments offers and promotion recruitments) in Anglophone regions with an almost 14% Customer database growth in 2015 (the growth model used by MTN from 2012-2014)
  • The 4G also allows the operator to increase growth which now seems to depend on Data as an indispensable tool for all business offers and, especially, for positioning, to confirm and maintain leadership on the Telecoms market in Cameroon.

Consequently, Orange could not wait to react because it felt threatened in its comfort and strategic profit zone.


Threats in the Telco Sector

The Telecoms market in Cameroon, in the next two years, includes several undetermined variables. We can already identify three big threats to the leaders of the Telecommunications market in 2016. They include:

  1. The effectiveness of number portability, which was the purpose of the last ART Board meeting, and whose database management shall be awarded to Huawei. 
  1. The second threat are the two new 4G and LTE operators, announced to enter the Cameroon market in 2016. If it is true that the arrival of Nexttel disrupted the market and pushed operators to do a structural reorganization of their business models in the Cameroon market (increasing social capital at Orange, sub-contracting technical inputs at Nexttel, Orange and MTN, managing subscribers servers at MTN, extending and strengthening the coverage and quality of urban and rural network etc.). This could also mean that the market is extremely risky to the point where the threat of churn is growing and MTN is dropping from 10 363 000 in 2Q2015 to 9 178 000 in 4Q15, that is, a net loss of nearly 12% of subscribers in 6 months.  This, as opposed to Orange dropping from 7 576 000 in 3Q15 to 7 080 000 subscribers in 4Q15, making a loss of nearly 7% in 3 months. Obviously, this can also be explained by the pressure exerted by the regulator to identify the subscribers and disconnect the unidentified customers.  comparatif par trismestre
  1. The option of outsourcing was abruptly adopted by operators in order to focus on the core of their business (marketing and distribution) and to find efficiency and possibly reduce operational costs. Nonetheless, we are faced with many uncertain variables in the current market that require extreme caution. 

This also allows us to review a common threat (loyalty) between the two operators.  Today, the only remaining element to guarantee loyalty is the phone number; a feature of oligopoly markets.  For the operators, loyalty implies offering services and discounts in some shops without really creating a long term relationship with their High-Value-Consumer clients.


Some Development Avenues

First, the ability for the operator to already understand the change of its new business model, which now considers Data as a key factor in all new strategies.  This does not mean selling volume or speed to customers but creating value with content in usage and especially tailoring the model to meet clients’ real needs.

One cannot conceive a customer-loyalty-strategy without mentioning customer satisfaction even with extensive marketing tools.  The consumer experience is based on operational variables such as: quality of service, sales support, point of sale, online support, price, and service/product, which provide satisfaction and later build loyalty. This can also be done through an emotional relationship between the brand and the customer.  For years now, the use of lurking by the operators in oligopoly markets have not yielded much in providing customer satisfaction or earning loyalty.

Today, the question will be to “invest big and win small” in a clearly defined strategy


Sources: Annual Reports of Operators, TELECOMS COMPETITION IN AFRICA & THE MIDDLE EAST: Learnings from business analytics

Media Intelligence, March 2016.

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