‘African Telcos prioritize new skills to stay afloat’

TELECOMUNICATION companies across Africa
are increasingly focusing on effectively
maximizing their return on investment from
data and on monetizing emerging opportunities
such as the Internet of Things (IoT) to remain
competitive and afloat, the International Data
Corporation (IDC) has said.
IDC said this is due to increasing competition
which is forcing the telcos to seek new
methods to stem the steady decline of
traditional voice services. “We expect to see
greater market consolidation as telcos increase
their efforts to acquire smaller ISPs in response
to the challenging marketing conditions,” IDC
said.
According to research director for
telecommunications, media, and IoT at IDC,
George Kalebaila. “This is being driven by
heightened market saturation, declining average
revenues per user (ARPUs), increasing
operating expenditure, and diminishing profit
margins on services, particularly in West Africa.
As such, IDC said it expects some
consolidation within the market, especially
between local ISPs that possess 4G LTE
frequencies and fibre-to-the-x (FTTX)
infrastructure and multinational telcos with
solid financial support.
In markets where 4G adoption is already
gaining traction, discussions around fifth-
generation network technology (5G) will take
centre stage, it observed that creating
awareness and bringing the possibilities and
expectations of future data networks to the
forefront would take centre stage.
“IDC expects vendors to focus on the higher
bandwidth 5G offers and the technology’s
potential ability to support emerging services
such as IoT, seamless video on demand or
IPTV, drone video recording, smart city
solutions, and virtual reality applications. We
also expect 5G to deliver gigabit connections
that enable the seamless delivery of rich
multimedia services and applications,” said
Kalebaila.
As competition continues to increase in Africa’s
more mature telecom and IT markets, the IDC
report said the need to attract and retain
customers through differentiation has become
imperative. This means that telcos must move
beyond traditional connectivity offerings and
provide IT services such as unified
communications and collaboration, cloud, and
datacenter services.
“In the medium to long term, telcos will be
forced to re-evaluate their business models to
efficiently design, develop, and deliver cost-
effective solutions and services. This may
compel telcos to migrate from operating legacy
networks to deploying agile systems that are
capable of increasing operational efficiency
while speeding up the time to market of new
solutions,” Kalebaila said.
Those telcos that prioritize technologies such
as network functions virtualization (NFV) and
software-defined networking (SDN) for the
delivery of connectivity, cloud, and datacenter
services will be well placed to maximize cost
savings, achieve greater efficiency, and increase
productivity,” Kalebaila explained.
In 2017, telcos are also expected to focus more
on 4G monetization strategies such as
enhanced data offerings, service bundling, and
partnerships with digital media companies from
a content perspective. While the deployment of
4G networks is already gaining traction across
Africa, spectrum availability, low customer
awareness, low coverage, high tariffs, and the
cost of 4G smartphone devices remain key
challenges.
“The availability of affordable 4G smartphones
is expected to increase 4G penetration, and
those telcos that are creative in their offerings
and allow customers to trade in their existing
3G devices will differentiate themselves from
the competition.
“Rather than focus on extolling the features of
4G, telcos could further drive adoption by
introducing innovative data bundles and
transparent prices, particularly as 4G provides
an opportunity to start transitioning to a data-
centric model and begin preparations for a
voiceless future,” said IDC.
Kalebaila says that telcos that take concrete
steps to transform themselves internally will be
best positioned to survive digital disruption.
“The key focus areas in 2017 will include
business model transformation and network
efficiency improvements using so-called ‘3rd
Platform’ technologies, namely cloud, big data,
mobility and social business,” he said.
Before they can become digital transformation
partners to their clients, he noted that telcos
will first need to harmonize their internal IT
environments with external-facing IT systems
and become digital providers to their own
internal business functions.
He adds that telcos need to identify their key
challenges, prioritize the development of unique
digital transformation strategies, and
implement a phased approach to digital
transformation.