Operators in emerging markets are overwhelmingly relying on mobile data services to increase ARPU from prepaid customers, according to new research from Informa Telecoms & Media.
The survey showed that prepaid customers make up the majority of subscribers in emerging markets, ranging from 75% to 99%, despite the fact that postpaid customers create the largest share for operations.
The analyst company says that It is important for operators with a majority of their customers on prepaid to promote data services to these customers to increase their average revenue per user (ARPU). In a survey of 156 operators, 84% of operators said that they are pushing mobile data services to their prepaid customers to raise ARPU. Other strategies to raise revenue include strategies are offering free data trial periods (68% of respondents), special promotions on smartphones (58% respondents) and free MBs when topping up (57% respondents).
“Yes of course there are apparent challenges in pushing data services to prepaid users as these are price-sensitive customers and there is a low penetration of smartphones in this group. Demonstrating the value of data and relevance of specific applications will be essential to induce these users to adopt mobile data”, said Nishi Verma Nangia, senior analyst at Informa Telecoms & Media.
Only 37% of operators today are offering free trial periods for specific apps but they plan to increase their focus on apps over the next five years as almost 53% of the operator respondents believe that application-based plans will be one of the key prepaid pricing approaches.
Loyalty is another challenge for the prepaid segment. Although the survey shows that 63% of the operators have some type of loyalty program available for prepaid customers, most of these initiatives are simple point rewards and top-up promotions that do not take into account the customer’s profile or the length of the relationship with the operator.
“Of course operators claim that the prepaid ARPU does not justify investment in loyalty programs, however, if operators do make the effort to segment their prepaid customers based on demographics and service usage, there is a clear opportunity to offer more targeted plans and loyalty programs,” said Nangia.