Competition Brings Big Changes to South Africa's Telecom Sector, Pyramid Research Finds
Apr 9, 2009
South Africa's telecom market is in the midst of a dramatic change, as incumbent fixed-network operator Telkom SA faces increasing competition not only from mobile voice and data services but also from competitive fiber network buildouts, according to a new report from Pyramid Research (www.pyr.com), the telecom research arm of the Light Reading Communications Network (www.lightreading.com).
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South Africa is the largest telecom market in the Africa & Middle East region in terms of revenue and is one of the most advanced in Africa in terms of penetration rates, notes Yejide Onabule, Analyst at Pyramid Research and author of the report. "The high penetration rates, however, make it one of the slowest growing markets in the region, driving operators to seek new ways to distinguish themselves and develop new revenue streams," she says.
Telkom SA, the incumbent fixed-network operator, is feeling the pressure. "Fixed voice revenue has been declining in the past few years and this trend is expected to continue; revenue is expected to fall from $2.7 billion in 2008 to $2.1 billion in 2014, mostly due to the falling cost of mobile telephony," says Onabule. "Telkom's revenue will decline by 20 percent in the next five years due to a continuation of fixed voice revenue's downward trend and competing operators' plans to build out fiber networks that will cut into Telkom's business service revenues," Onabule adds.
The need for high-capacity networks has triggered a wave of WiMax and other fixed-wireless access (FWA) capex, allowing operators to bypass Telkom's former monopoly of the last mile. "Operators that previously relied on Telkom's network such as MTN and Vodacom are now building their own national fiber-optic networks, contributing to Telkom's revenue decline over the forecast period," explains Onabule. "Telkom also lost its monopoly in fixed communications when the newly established second national operator Neotel was licensed in 2005," she adds. Neotel, has finally launched services over fixed-wireless CDMA and WiMax networks, while smaller ISPs, such as MWeb, have made some inroads in the high-growth DSL market.
Communications Markets in South Africa is part of Pyramid Research's Africa and the Middle East Country Intelligence Report Series. Pyramid Research's premium Country Intelligence Reports are the industry's best available analysis on market trends, regulatory environments, and competitive dynamics for 60 countries worldwide.
Download an excerpt of this new report here: http://www.pyr.com/downloads.htm?id=18&sc=PR040909_CIRSAF
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Pyramid Research (www.pyr.com) offers practical solutions to the complex demands our clients face in the telecommunications, media, and technology industries. Our analysis is uniquely positioned at the intersection of emerging markets, emerging technologies and emerging business models, powered by the bottom-up methodology of our market forecasts for over 100 countries - a distinction that has remained unmatched for nearly 25 years. As the telecom research arm of the Light Reading Communications Network, Pyramid Research works with Heavy Reading, providing the communications industry's most comprehensive market data, trusted research, and insightful technology analysis.
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Founded in 2000, Light Reading (www.lightreading.com) is the leading online media, research, and focused event company serving the $3 trillion worldwide communications market. Lightreading.com is the ultimate source for technology and financial analysis of the communications industry, leading the media sector in terms of traffic, content, and reputation. Light Reading's research arms, Heavy Reading and Pyramid Research, provide the most comprehensive communications research, market data, and technology analysis in close to 100 markets around the world. Light Reading produces nearly 20 targeted communications events including TelcoTV, Ethernet Expo New York and Ethernet Expo London, The Tower Summit @ CTIA, and Optical Expo, as well as focused one-day events tailored for cable, mobile, and wireline executives. Light Reading was acquired by United Business Media in August 2005 and operates as a unit of TechWeb.
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