Finally the 4G war has started! Globacom (Glo) and MTN have been up in arms to be the first telecom carrier to launch 4G LTE mobile Internet service in Nigeria.
As for Glo, the move to launch its own 4G service is borne out of its aim to snatch the lead from MTN. Five days ago, Glo announced that its 4G service is now available across the country.
The company has tested its service across- Lagos- Lekki, Ikoyi, V.I, Ajah and Akoka (South West), Port Harcourt- Aba Road, Trans Amadi, Diobu, Old GRA and UNIPort, Warri, Eket and Benin (South South), Abuja- Maitama, Wuse, Asokoro, Garki/Central Business District and Airport Road and Jos (North Central), Yola – ABTI (North East) and Zaria- ABU (North West).
MTN has also touted its 4G service rolling it out in some select states.
However, these two competitors are selling the service the same way. Glo requires all its subscribers to ‘buy’ the 4G LTE Sim from any Gloworld, Glozone and dealer outlet nationwide. Customers will have to buy compatible devices then subscribe to the 4G-LTE data plan. This is exactly the same process for MTN subscribers. Same approach, same messaging and strategy.
The absence of a clear-cut strategy from either MTN and Glo would probably lead the ‘war’ to one approach- the battleground will be pushed to pricing. Pricing is the only strategy Nigeria’s telecom category compete with. While this might seem simplistic, the end result is not always good.
In the 3G section of the business, Glo has been able to give MTN a bloodied-nose but crashing the price to the lowest it can ever be. The company has put itself under serious pressure to get huge volume of subscribers to balance out and make some margin. In the aim to be the market leader in data sales, Glo is charging about 70% less per kilobyte of data compared to any competitor. What MTN has going for it is its highest subscriber base which has directly come under serious threats from Glo and two other competitors and indirectly by regional non-mobile 4G LTE providers.
The 4G race will not be any much different. Glo will once again stretch itself thin. The fact that there are already 4G LTE providers will make the ‘war dirtier’.
The demerits of competition-based pricing far outweighs its merits. In the race to outsell each other, MTN and Glo will end up delivering less value to customers because cost of data services would definitely go higher, Their revenue stream will be chaotic, margins will plummet further and at the end of the day, they be providing the 4G LTE service at a loss. It is a race to the bottom and smaller competitors are bound to be the first sets of casualties.
Expect the likes of Spectranet, Swift and nTel to rethink their pricing. In the end, the customer will benefit should they not have a secret arrangement to fix price.
Let the ‘war’ begin!