Telcos across Africa are increasingly focusing on effectively maximising their return on investment from data and on monetising emerging opportunities such as the Internet of Things to remain competitive and afloat, according to George Kalebaila, Research Director for Telecommunications, Media, IoT at IDC. This is due to increasing levels of competition that is forcing them 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,” says Kalebaila. “Particularly in West Africa, this is being driven by heightened market saturation, declining average revenues per user, increasing operating expenditure, and diminishing profit margins on services. As such, IDC expects some consolidation within the market, especially between local ISPs that possess 4G LTE frequencies and fibre to the x infrastructure and multinational telcos with solid financial support.”
In markets where 4G adoption is already gaining traction, discussions around fifth-generation network technology will take centre stage, creating awareness and bringing the possibilities and expectations of future data networks to the forefront. “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,” says Kalebaila. “We also expect 5G to deliver gigabit connections that enable the seamless delivery of rich multimedia services and applications.”
As competition continues to increase in Africa’s more mature telecom and IT markets, 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 data centre 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,” says Kalebaila. “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. Those telcos that prioritise technologies such as network functions virtualisation and software-defined networking for the delivery of connectivity, cloud, and data centre services will be well placed to maximise cost savings, achieve greater efficiency, and increase productivity.”
In 2017, telcos are also expected to focus more on 4G monetisation 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,” says Kalebaila. “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.”
Open application programming interfaces is expected to become more commonplace, enabling the developer ecosystem to drive innovation and for telcos to improve partner management. “Historically, open APIs were used in traditional telco services such as USSD and SMS,” says Kalebaila. “Going forward, we expect to see remarkable growth in financial services platforms like mobile money and breakthrough emerging technologies like IoT, in a bid to drive the release of APIs by telcos to the developer ecosystem. This will allow telcos to harness innovative and localised solutions.”
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 says.
Before they can become digital transformation partners to their clients, telcos will first need to harmonise their internal IT environments with external-facing IT systems and become digital providers to their own internal business functions. “By streamlining, optimising, and modernising their own IT environments, telcos can leverage the lessons learnt internally to optimise customer service and experience to their external clients,” says Kalebaila.
He adds that telcos need to identify their key challenges, prioritise the development of unique digital transformation strategies, and implement a phased approach to digital transformation. “For example, Telcos can use big data technologies to upsell and cross-sell services, design new products and services, or create new revenue generation streams from existing customer data assets,” says Kalebaila. “Understanding and tracking customer behaviour will also help telcos provide personalised and optimised offerings to their subscribers, and therefore help enhance customer loyalty.”
