Market Consolidation Is Becoming Prevalent In South Africa's Telecommunications Market

According to a new report, market consolidation is becoming more prevalent in the South African telecommunications market. The consolidation is said to be as a result of South African telecommunications operators looking to build the capabilities required to position themselves as end-to-end ICT and digital service providers.

The report titled "Digital Transformation of Telecommunications Operators in South Africa, 2016", is compiled by Frost & Sullivan's Communication Services Growth Partnership Service.

Digital Transformation of Telecommunications Operators in South Africa
Report: Digital Transformation of Telecommunications Operators in South Africa, 2016

"Changing market, customer, and technology dynamics are compelling telco operators to become more agile and customer centric by investing in new products and services aiming to transform their cost base, and simplifying as well as digitalising complex business models, processes and systems," said Deepti Dhinakaran, Digital Transformation Senior Research Analyst at Frost & Sullivan.

The report cites examples such as Vodacom's procurement of XLink to expand and strengthen its Internet of Things (IoT) offerings, and Telkom's acquisition of BCX to bolster its enterprise ICT services portfolio.

"Moving forward, telco operators should diversify services, ensure they offer a superior digital customer experience, improve time to market, and form strategic partnerships in order to remain relevant," said Dhinakaran.

Key telecommucations operator investment areas that show significant growth potential in South Africa include IoT/M2M, fibre, eCommerce, and Big Data and analytics. During the next three years, telecommunications operators will focus on these areas to expedite their digital transformation journey, while offering innovative and diversified services. According to Frost & Sullivan, other developments driving digital transformation include:

  • A surge in data consumption driving 3G and 4G network coverage, resulting from an increasing demand for new and innovative mobile application-based services.
  • A boost to fixed broadband, wireless broadband, and mobile data services due to rising demand for data.
  • Telco operator migration to more advanced networks and IP-based services.
  • An increase in IT spend of 15.5 percent from 2016-2017.
  • Telco development of in-store digital experience to boost customer experience.
  • A growing demand for digital entertainment, digital payments, and IoT-based services.

"Legacy information technology systems (IT), disjoint IT stacks and a lack of integration between business support and operations support systems, on the other hand, are limiting the flexibility of operators which in turn hinders growth. As a result, telecommunications operators are investing in customer relationship management (CRM) systems and leveraging social media channels to provide a well-integrated, innovative, omni-channel customer service experience. Additionally, operators can be seen investing in networks transformation technologies such as Software Defined Networks (SDN) and Network Functions Virtualisation (NFV) in order to enhance their scalability and flexibility to offer new services, while also improving their efficiencies," concluded noted Dhinakaran.

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