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CEOs Will Need New Strategies to Survive in a Challenging Sub-Saharan African Telecommunications Market Says Frost & Sullivan - Move into rural markets and outsourcing emerge as critical survival strategies
CEOs Will Need New Strategies to Survive in a Challenging Sub-Saharan African Telecommunications Market Says Frost & Sullivan

 

NewswireToday - /newswire/ - Cape Town, South Africa, 2011/06/30 - Move into rural markets and outsourcing emerge as critical survival strategies.

   
 
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With increased growth in the African telecommunications market, competition has intensified. The market is nearing saturation and margins are increasingly coming under pressure. As a result, CEOs have to start considering rejecting strategies aimed at subscriber acquisition. Instead, they need to consider outsourcing as a core strategy, adopt surgical network deployments and develop data strategies for low-cost models.

New analysis from Frost & Sullivan (wireless.frost.com), 360 Degree Perspective of the Sub-Saharan African Telecommunications Market, finds that the telecommunications market in Sub-Saharan Africa earned revenues of $50 billion in 2009 and estimates this to reach $88.1 billion in 2016.

"The key drivers for growth for the telecommunications sector include exponential growth in wireless technologies and services," notes Frost & Sullivan's ICT Business Unit Leader for Africa, Birgitta Cederstrom. "Growing demand for broadband and data services, especially by the enterprise sector, intensifying competition and mass market targeted strategies will define the market landscape."

Wireless technology has become the primary mode of communication in Africa and continues to enjoy double-digit growth. This accelerated growth has attracted new participants into the market, with the resulting competition compelling operators to become more creative in their product offerings.

"Mobile money is the main offering for mobile providers while end-to-end connectivity and communication services have become important differentiators in the internet services market," remarks Cederstrom. "Fixed mobile convergence will be a key future differentiator in both the mobile and fixed line service segments."

Enterprise data services have emerged as a key cash cow for telecoms providers. Allied to this trend has been the increased focus to service this market.

Many challenges still confront market participants. For instance, the low level of foreign direct investment is leading to the slow development of the broadband market in the region. Low disposable income levels, paralleled by the high cost of computers, are limiting consumer demand for broadband services.

The market continues to be hampered by intensifying competition and near saturation, as operators remain hesitant to expand into rural areas. At the same time, the cost of doing business in Sub Saharan Africa has risen notably and is likely to increase further with rural expansion. Furthermore, device penetration and affordability remains low, and infrastructure shortages remain a key hindrance for sound network and service rollout.

Rural expansion has become critical for operator strategies, as this market presents the largest growth potential and helps operators address the issues of urban market saturation. Outsourcing, shared services and infrastructure sharing are also key in protecting margins, as operating costs continue to soar. Fixed mobile differentiation is a strategic response that both mobile and fixed line operators continue to explore, albeit slowly.

"Operators that move into the rural markets, and do so fast, will reap the first mover advantage in the short to medium term," advises Cederstrom. "Outsourcing, managed services and infrastructure sharing are set to become critical aspects of operator strategies."

If you are interested in more information on this study, please send an email with your contact details to Samantha James, Corporate Communications, at samantha.james[.]frost.com.

360 Degree Perspective of the Sub-Saharan African Telecommunications Market is part of the Mobile & Wireless Communications Growth Partnership Service programme, which also includes research in the following markets: East African Mobile Communications Market Tracker, Mobile Backhaul Network Infrastructure in Selected Sub-Saharan African Markets and Mauritius Mobile Communications Market. All research included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.

About Frost & Sullivan
Frost & Sullivan (frost.com), the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents.

360 Degree Perspective of the Sub-Saharan African Telecommunications Market / M576

 
 
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CEOs Will Need New Strategies to Survive in a Challenging Sub-Saharan African Telecommunications Market Says Frost & Sullivan

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