Negative real growth for SA telecoms - TechCentral

Negative real growth for SA telecoms

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South Africa’s telecommunications industry will grow at a compound annual rate of just 1,4% over the next five years, meaning that in real terms — adjusted for inflation — the sector is shrinking.

But the industry has never been as dynamic or as competitive as it is today, says Denis Smit, MD of BMI-TechKnowledge, on whose research the numbers are based.

Despite the poor overall growth forecast for the industry, there are pockets that are growing much quicker than the commoditised areas. These include data centre services, cloud computing and video on demand.

“The market is maturing, but telecoms usage has never grown more rapidly nor shown as much dynamic change in profile,” BMI-T says.

And despite recent tariff increases by three telecoms operators, the trend in pricing remains downward. “The general trend is still towards giving more for less, which plays in the consumer’s favour,” says BMI-T director Brian Neilson.

A similar trend is occurring in the fixed-line market, he says. There continues to be aggressive price competition in broadband pricing, supported by cuts to wholesale prices.

“Fibre to the home (FTTH) is a particularly interesting trend to watch, and again aggressive price offerings are the order of the day, some of which are now comparative with [copper digital subscriber line]price points,” Neilson says.

But FTTH broadband is still a “wildcard” as it’s not yet clear how much deployment will take place and what consumer uptake of the services will be like. There are questions about the sustainability of fibre deployments “in the face of vigorous competition and depressed prices”.

“Overall, BMI-T forecasts a solid growth rate in home Internet revenues, whether they are based on fibre, traditional copper lines or wireless connections,” it says. “While new wireless technologies such as LTE-Advanced are opening up new possibilities for fixed-line replacement, BMI-T believes that fixed-line connectivity will benefit from the trend towards video on demand.”

The company says rapid growth can be expected in video on demand in the next three years, driving consumer demand for uncapped services, thus favouring fixed lines. “No fewer than 25% of metro respondents surveyed, across all household income groups, said that they are interested in video-on-demand services. The vast majority (79%) said that they would use VOD in addition to subscription television rather than as a substitute.”  — © 2015 NewsCentral Media

2 Comments

  1. ‘Vigorous competition and depressed prices’….It just doesn’t seem the optimum time to be a newly retrenched ex-Telkom employee trying to make it as an “Entrepreneur’ out there now does it?
    “Did somebody say the SARB is starting an interest rate hiking cycle as well?”

  2. When you only have 15% of the nation using the Telecommunications and paying revenue then you have a burned system. In effect more taxes = an ineffective government. Government is just squandering R100b’s per year! = 0 growth Greece is just around the corner.