Telecommunications companies in Nigeria and across sub-Saharan Africa are under mounting pressure as income per subscriber continues to fall, even though their operating costs have remained broadly unchanged. According to a new PwC report, the ongoing decline in Average Revenue Per User (ARPU) is squeezing profit margins in one of the most competitive markets on the continent.
The report, shared at a stakeholder workshop organised by the Nigerian Communications Commission (NCC) in Lagos, highlights how traditional mobile services such as voice calls, SMS and basic data are becoming commoditised. This has resulted in intensified price rivalry and reduced pricing power for operators, particularly against the backdrop of weak consumer purchasing power and rising inflation.
Although telecommunications firms have continued to grow their subscriber numbers across sub-Saharan Africa, the revenue they derive from each customer has declined steadily since 2020. PwC’s analysis shows that growth in ARPU in the region has been significantly lower than in other global markets. In 2020, ARPU grew by less than 3 per cent in sub-Saharan Africa, compared with more than 28 per cent in the Asia-Pacific and over 7 per cent in the Middle East and North Africa (MENA). Even in subsequent years, the gains in Africa have been marginal, lagging well behind these regions.
PwC forecasts that global telecom revenues will expand at a compound annual growth rate of around 2.9 per cent through to 2028, reaching approximately US$1.31 trillion. However, even this modest increase is expected to fall short of global inflation rates, which are projected to range between 3.7 per cent and 5.8 per cent annually over the same period. This mismatch suggests that operators may continue to struggle to maintain profitability unless they adapt their business models.
One of the fundamental reasons behind the decline is the shifting behaviour of telecom customers. Increasingly, users prefer digital channels for service management, opting for self-service mobile applications, electronic Know-Your-Customer onboarding and automated chatbots, rather than traditional physical outlets. The rise of app-based account management and electronic top-ups has diminished reliance on paper recharge cards and call centres, signalling a broader transformation in customer expectations and engagement.
Data consumption patterns also reflect deeper changes in how people use their mobile devices. Younger subscribers, in particular, are driving demand for content and social engagement, favouring platforms such as TikTok, WhatsApp and various video streaming services. This trend is pushing operators to rethink conventional data pricing, as basic connectivity alone is no longer sufficient to attract or retain customers.
To counteract the erosion of revenue from core services, many telecom companies in Nigeria and around the world are bundling additional offerings with their data packages. These may include partnerships with over-the-top (OTT) content providers, financial-technology platforms, health and telemedicine services as well as other digital utilities. PwC’s report notes that about 77 per cent of global streaming partnerships are now distributed through telecom bundles, underscoring how operators are transforming themselves into aggregators of broader digital lifestyles rather than mere connectivity providers.
By 2024, some 20 per cent of the global streaming market was already being delivered as part of telecom bundles, representing a significant shift in how these services are marketed and consumed. For operators, this strategy not only helps retain subscribers but also creates new avenues for monetisation in an increasingly saturated marketplace.
Longer-term technological solutions, such as 5G, could offer a partial reprieve from falling ARPU, though uptake has so far been slower than many had expected. PwC projects that 5G will account for roughly 64 per cent of global mobile subscriptions by 2028, with total 5G connections rising to more than 7.5 billion. While this next-generation network standard may unlock new revenue opportunities, such as for Fixed Wireless Access (FWA) services in underserved urban and rural areas, its full impact on telco revenue remains to be seen.
Ultimately, the report argues, the future sustainability of telecom operators will hinge on their ability to integrate digital content, lifestyle services and advanced connectivity into cohesive propositions that deliver value well beyond basic voice and internet access. Those operators that swiftly evolve into comprehensive digital platforms are likely to fare better in an environment where traditional margins are under relentless pressure.
