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ICT Update
Corporates and SMEs make up 45% of telecoms spend in SA
Tertia Smit, Senior Telecoms Analyst, BMI-T
The Top 350 and Corporate Report, and the SME Report, estimate the total South African overall telecommunications services market, (excluding interconnection fees) including fixed, mobile, internet and other data, to have been worth R99bn in 2007.
The local business environment comprises almost 600 000 companies that are tax registered, with roughly 77 000 of these companies making up the corporate and midmarket sector, which is defined as organisations with more than 50 employees. The remaining 506 000 companies fall into the SME sector, which is classified as having between two and 50 employees. Non-VAT registered businesses, informal, and occasional businesses, thought to number between 1,7 million and 2,5 million, were not included in the analysis.
We segment the overall telecoms spending market into three categories, namely the Top 350 and corporate market, S MEs, and the residential/ private and informal business sector. The private and informal business sector constitutes 55% of the total market share, with mobile services making up the bulk of it, while the formal SME segment comprises 18%, and the corporate market makes up 27% of the total market.
The reports provide detailed spend analyses on telecoms service types. These include overall mobile voice spend including LCR and SMS, and is broken down further into fixed voice spend, internet spend (spend on mobile cellular internet access for PCs, ADSL , ISP fees and other wireless services) and other data spend, incorporating VANS and ISP spend. In the corporate market, the telecoms service type that gained the lion’s share of the spending was mobile voice, followed by LCR, SMS, and fixed voice. Conversely, SME organisations overall still spend more on fixed voice than other service categories, including mobile services. I n the S ME market, slightly more than half of all telecoms spend is on fixed voice services.
We forecast that the overall Corporate spend on telecommunications services will grow at an average rate of 6,6% between 2007 and 2012, while the S ME market is expected to grow at an average rate of 5,5% over the forecasted period.
Higher growth in data services is the main factor driving Corporate growth at a more rapid rate than SMEs. Voice services are expected to slow down, and convergence between fixed and mobile services will continue, and players in both of these arenas will target each other’s territory more aggressively, as quickly as the regulatory environment allows this to happen.
The telecoms market is still in the early stages of the radical change that is expected, including the aforementioned fixed-mobile convergence, and a shift in revenue proportions, away from circuit switched tariffed voice towards I P centric voice and data services. A more established trend is that of fixed-to-mobile substitution. Data services continue to show higher growth rates in both the fixed and mobile markets, for Corporate and SME organisations.
Internet access and value-added services exhibit the strongest growth rates. This high growth rate is stimulated, in particular, by the need that Corporate companies have for quality service and higher bandwidth, as well as having mobile internet connections to allow for an increasingly mobile workforce. Conversely, the fixed voice market is more mature.
Growth overall is attributed to the competitive dynamics within the telecoms market itself, the growth in the South African economy and the resultant increase in the number of both Corporate and S ME organisations. While prices per unit of service continue to fall in many service areas, overall market growth is maintained, albeit in single digit rates, due to the need for more services, especially in the Corporate market.
Tel: (011) 540-8000
Email: tertia@bmi-t.co.za
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