Dark Fiber

TMCnet Contributor

A new report from Pyramid Research indicates the South African telecom market is currently in the midst of a dramatic change. In addition, that Telkom SA, the incumbent fixed-network operator, is facing a lot of competition from both mobile voice and data services as well as from competitive fiber network buildouts.

 

The report, “Communications Markets in South Africa” has been authored by Yejide Onabule, an analyst at Pyramid Research. He noted that South Africa is the largest telecom market in the Africa & Middle East region in terms of revenue and that the country is one of the most advanced in Africa in terms of penetration rates.

 

But, it is also one of the slowest growing markets in the region due to the high penetration rates. This slow growth is driving operators to search for new ways to distinguish themselves and develop new revenue streams.

 

Onabule forecasted Telkom’s revenue to decline by 20 percent in the next five years. This decrease, he says, is 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.

 

The demand for high-capacity networks has increased the popularity of WiMax and other fixed-wireless access (FWA) capex. This popularity in turn has allowed operators to bypass Telkom's former monopoly of the last mile. Commenting on this change, Onabule said that the operators such as MTN and Vodacom, who previously relied on Telkom's network but are now building their own national fiber-optic networks.

 

“Telkom also lost its monopoly in fixed communications when the newly established second national operator Neotel was licensed in 2005,” he added.

 

Companies have experienced a decline in fixed voice revenue in the past few years and this trend is expected to continue, according to the research firm. Onabule predicted the revenue to fall from $2.7 billion in 2008 to $2.1 billion in 2014 – a drop he attributes to the falling cost of mobile telephony.