2010 to separate telecoms best from the rest

Frost & Sullivan industry analyst Africa, information and communication technologies Spiwe Chireka, told I-Net Bridge that market penetration had finally passed the 100% mark, "you have mobile and fixed line operators including Telkom, MTN, and Vodacom competing head to head across all telecoms business segments.

Telkom's monopoly status in the wholesale segment is slowly being eroded, thanks to the ECN Act that allows other operators to self provision."

Chireka also pointed to Neotel making waves, with Frost & Sullivan expecting the company to continue doing so in 2010.

Looking at potential pitfalls and challenges ahead in the telecoms arena, Chireka said: "Subscriber acquisition and retention is no longer enough to sustain a market-leading position."

Chireka noted Vodacom and MTN's movement into data/broadband, which historically had been Telkom's area, while Telkom recently announced its six billion rand push into the mobile space over a five-year period, with an entry stage set for 2010, traditionally the territory of Vodacom and MTN.

Frost & Sullivan highlighted a need for innovative thinking and a focus on enhancing customer value in order to drive up revenues and push relevant products and services as the big rivals entered the New Year.

"While this may be a scary realisation for all the players involved, I believe it will require SA operators to adopt first world strategies as the market will be on par with developed markets in terms of penetration and uptake of services.

"So what I am saying is that we can expect to see first world strategies being implemented in a developing market," the analyst said.

On potential pitfalls facing the industry, F&S said: "It is not surprising the fact that subscriber numbers (and the growth rate) are falling as a result of RICA."

RICA, the Regulation of Interception of Communications and Provision of Communication-Related Information Act, as set out by the South African Government, requires everyone who has an active mobile phone number or purchases a new Prepaid Starter Pack, to register their SIM cards from July 1, 2009.

"We have seen it happen elsewhere where SIM registration has been implemented e.g. Senegal; DRC; and Ghana. But the key thing is that operators in these markets have adjusted and adapted and are back on the growth path again," said Chireka.

"Sonatel (principal telecommunications provider of Senegal) suffered a year and a half of low and in some months negative subscriber grow rate but at the end of 2008, the company posted a 50.9% growth ... marking its recovery

So I think the companies will adapt and we should see the market making a trip to recovery," the analysts said.

A point of interest would be to see how telecoms firms' adjust/circumvent RICA to be able to take advantage of the influx of visitors during FIFA 2010, Frost & Sullivan said.

"It would be a shame if nothing was done and operators had to rely on roaming revenues during what could be a key revenue-generating event for them," Chireka said.

The industry analyst said that the arrival of Telkom as the fourth mobile operator in 2010 would force action from Cell C.

"With Telkom coming into the market, and the likes of Vodacom increasing market share, it would be near senseless for the company to not do anything.

"All in all the year will be a highly competitive one...this is when we shall start to separate the cream from the crop," Chireka concluded.

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