NIGERIA’S UMBRELLA OPERATORS FLOURISH ON BOOSTER CARD SALES

Telecoms

Nigeria’s airtime resellers are commonly referred to as business centres, or “umbrella operators,” a moniker that comes from their typical set-up: a table, some chairs, one or more handsets, and an umbrella. In a market in which affordability has remained an issue, umbrella operators have filled a gap, allowing MNOs to maximize the opportunity by empowering umbrella operators to provide incremental traffic.

When initially introduced by MTN Nigeria, the booster card allowed heavy prepaid users to benefit from airtime rates at a discount as high as 50 percent over standard prepaid packages, in exchange for a N4,000 (US$30) upfront fee. The booster card is essentially a monthly fee, its main feature being that it is a prepaid monthly fee, free of any contractual attachment and valid 30 days from purchase.

Current standard prepaid rates stand at about N48 (US$0.37); Booster card rates are about N20–N28 (US$0.16–$0.22). Put simply, the business centers have a wide enough margin to charge their customers anything below the US$0.37 but high enough above the US$0.16 to get the margin desired. These business centers are effectively trading on the wide margin provided by the operators. Initially, all GSM operators introduced various forms of booster cards (monthly, weekly, Super Booster).

While creating value for individual users, the booster card also created an opportunity for individuals who saw the value in trading on the margins between the booster card rates and the standard rates.

Pyramid Research