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Social media eating away at SA telecos’ profit

Everyone loves social media, and even if you don’t you can’t get away from the fact that other people want to talk to you via WhatsApp, Twitter or Facebook these days rather than the good old telephone. Which is why the results of a survey which says social media is eating away at South African telecos’ revenues shouldn’t come as a surprise to anyone.

IBM has just released its annual Institute for Business Value’s (IBV) survey and found that South African mobile phone users are actually moving away from traditional voice calling than previously thought – in favour of using social media.

A third of the respondents said that they would rather use communication methods like as Facebook, WhatsApp and Twitter, than picking up the phone to call someone.

By the same token, social media has also encroached on text messages, as nearly 60% said they had or would reduce SMS usage because of alternative messaging tools.

“The survey findings tell us that social media is literally soaring. It’s now the primary communication vehicle for an increasing number of digitally-aware consumers, giving consumers unprecedented power to build or demolish brand strength as they blog, text and comment via social media,” says Craig Holmes, Vice President for Communications Industries at IBM in a press statement.

Mobile service providers aren’t stupid, of course, and they’ve already been busy diversifying. MTN, for example, recently started offering music downloads, music streaming and other value-added services over the last couple of years to maintain its subscriber numbers. It has also taken its Mobile Money e-wallet service into the physical realm, with the launch of a prepaid Visa card available through Pick’n’Pay and Boxer stores.

But are they moving fast enough?

In a quarterly update in April, MTN said that its subscriber numbers have declined by almost a million to 24.9 million at the end of the second quarter. Even though it has lost a significant number of subscribers, data subscriptions increased to 14.5 million, and it said that data revenue now contributes 22.8% of their total income.

Holmes certainly thinks that telcos are failing to keep up with customers, and in the long run that’s going to hurt them badly.

“Telecom providers have transformed how the world communicates, but they are essentially lagging in how they communicate with their own customers. Consumers in South Africa tell us they buy on trust and relationships, and that they want one-on-one social-style communications and will be more loyal on the back of good experiences, yet telecoms providers locally continue to experience declining revenues. They have to do more – really tune in to digital consumers, better understand their wants and needs, and then respond with compelling user experiences.”

[Image – Shutterstock]

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