Market Saturation and declining subscriber growth a challenge for Africa telecoms
Johannesburg, South Africa – 16 May 2011 – Launching TechNiche 2011, Multisource’s annual open day, CEO Richard Smuts-Steyn noted that 2011 has been a financial sound year thus far, with identical levels of profitability as 2010, but with significant investment into XConnect, one of the new joint ventures brought on board in 2010. Similarly large investments were also made into new partnerships with Samsung and STM.
TechNiche has become a must-attend event to anyone who deals with wireless communication and two-way radio. 2011 marked the 4th annual event, with attendance up 30% on last year, despite the previous 12 months being very challenging to all in the telecoms market. “It’s an industry that is truly in flux, is aggressive in both its demand for technology as well as cost consideration, and is shaped not only by local trends but also by international influences and technological norms,” said Smuts-Steyn.
TechNiche is aimed at sharing and learning about the latest technical developments and international standards, not to mention the unique master classes that go into the practical usage and implementation elements.
Over the last 12 months, NXD & dPMR have become the leading trends in two-way radio; Wimax (802.16m) and LTE will dominate the future of wireless communication and a significant IP evolution in terms of Backhaul, Voice traffic, and its influence on GSM Backhaul optimisation, has been noted. Multisource has worked tirelessly to identify strategic partners to deliver these solutions to the African market.
Cost consciousness in a growing market
Smuts-Steyn highlighted the increasing demand for Carrier Grade Backhaul. “If you review the data centricity of the market in 2010, you will notice a 2000% growth in data backhaul from 2G. With this demand for carrier grade backhaul, there has also been a strong push towards addressing the TCO of backhaul”, he noted.
National Carriers and large ISPs previously sought differentiation and profitability through aggressive geographic rollout of basic services and consequently sought to “own” their own basic infrastructure. Smuts-Steyn stressed that “Additional price pressures exerted on the voice market have seen much more cost conscious telecommunication companies throughout the African continent.” He said that this older philosophy was fast giving way to one of strict cost control and outsourcing of infrastructure to focus their creative skills on new services.
Market Saturation and declining subscriber growth
Operators in the more advanced markets across Africa are currently pursuing value added services and data products, while telecoms in less advanced markets are seeing a strong push towards penetrating the deep rural and previously disconnected market segments, through STM rural base stations.
Smuts-Steyn says that “with increasing competition and declining margins coming from pure data services, smaller ISPs are no longer able to see sustainable profits from data only. The market will drive the survivors into a value-added and voice market. In many cases, this requires improved interconnection services to cater for carrier class wireless communication”.
Massive growth within Africa
Telecommunication services across Africa are coming of age, and seeing an explosive growth that can only be served in the short to medium terms through wireless communication. “Even the perceived ubiquitous GSM coverage is not there. There are many African countries with less than 50% geographic coverage of mobile comms. (>80% population coverage but <50% geographic coverage)”, says Smuts-Steyn.
In order to ensure that continental growth continues, the African telecoms market needs greater investment and partnerships to bring cutting-edge technology that can reduce long-term costs. In November 2010, Multisource secured $300 million worth of vendor financing investment into telecommunications across the African continent through Sasfin, when it partnered with Samsung on its WiMAX-LTE offering.
About Multisource ( www.multisource.co.za )
Multisource has been in the telecommunication business since 1949 and is well respected and noted for its reliability and expertise. Its sources are multiple - creating a central service provider: one single contact point for any number of solutions designed and deployed to match your specialised need – whether it be mining, emergency services, municipalities, security, aviation and marine.
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From Left to Right: Malcolm Segal – Chief Financial Officer at Sasfin, Marcelo De Barros - Vice President of Projects and Implementation at STM Networks Inc., Kazuya Shimizu – ICOM Assistant Manager , Vernon Leas - Portfolio Manager: Sasfin Private Equity, Satoru Nishio - Icom Export Representative, Richard Smuts-Steyn – Chief Executive Officer at Multisource, Desigan Moodley - Chief Financial Officer at Multisource, Brian Burns - Telecommunications Business Development Director for Samsung Networks, and John O’Hare - founder and CEO of Azotel Technologies.