The South African ICT market is dynamic, strategic and growing fast, according to Research & Markets. Its low fixed broadband adoption is a major contributor to the dynamism of the mobile data segment, while the increase in bandwidth afforded by new international connections such as WACS (West African Cable System), which came online in May 2012, is enabling lower data pricing and higher bandwidth.
The growth in the adoption of data services is supporting the development of a range of other opportunities. Not only do these emerging segments afford new revenue streams, but they also provide strategic opportunities in terms of competitive positioning and differentiation.
Traditional voice services are plateauing in South Africa and will decline in coming years. Fixed voice services are already declining, and fixed incumbent Telkom reports falling volumes of minutes as well. Fixed-to-mobile substitution is partly to blame as the premium cost of mobile voice continues to decline; this trend is exacerbated by the lack of significant competition in fixed voice markets. Between 2012 and 2017 we expect that there will be a decline of almost US$2bn in total traditional voice services. SMS revenue also beginning to stagnate with the continued migration to IP-based messaging services.
Mobile apps, mobile advertising and cloud services are three of the fastest growing areas in the South African market. Despite continued strong growth in the broadband markets, there are new, long-term growth opportunities emerging that are also of strategic importance for service providers. The unique characteristics found in some emerging markets — such as low PC and/or broadband penetration, limited penetration of the more closed smartphone platforms and the dominance of mobile operator branding and device distribution — gives rise to opportunities not always available in developed markets.
Leading operators can leverage new opportunities to both defend their positions and find new areas of revenue growth. Vodacom has its own advertising business unit which is able to generate new revenue streams and provide additional value to its client base. It has also launched its own app store to defend against the growth of Apple and Android as well as to enhance the positioning of its smartphone and feature phone propositions. MTN also plans to launch its own app store: regional operators can leverage their experience and investments when expanding such services across their footprint.
Mobile app revenue is expected to show very strong growth, with a CAGR of 48%. The huge growth in the adoption of smartphones, the increasing availability of apps and the introduction of new payment methods are the key drivers. Carrier billing is becoming increasingly available, making app purchases easy and quick, and it also facilitates the adoption of in-app billing models that are becoming popular. Total spending on mobile apps is forecast to increase from $31m in 2012 to $220m in 2017.
