Is digital transformation happening in Africa?

29
Jun

Is digital transformation happening in Africa?

Three main factors contributed to this shift in the African telecommunications scene. First of all, Over-the-Top (OTT) services have become an undeniable rend in the world where the number of OTT mobile services users reached more than 1.8 billion. That is why, operators having suffered from the consequences of the high number of OTT users decided to cooperate with OTT providers to integrate those services in their offers, notably at the level of video content, music services and social media.

On the other hand, the high demand for online videos lead to a reduction in data prices. In fact, recent statistics show that 62% of mobile services users watch video content online. In 2014, 50% of traffic on YouTube was generated by mobile devices and analysts estimate that video will account 70% of overall mobile traffic in 2021. The growth of data consumption driven by demand on online video content, increases operators’ revenues. However, while OTTs monopolize voice services revenues, operators have to act fast in order not to lose their clients.

In spite of estimates highlighting growth of mobile revenues in Africa, Internet of Things (IoT) will have the grandest impact on the African continent and on the telecommunications industry in particular. According to the World Economic Forum, more than 50 billion devices will be connected by 2020. All telcos are aiming to invest in this field which has shown to be very promising and will create new revenue streams. Big data will be the main tool on which they will rely to improve decision making and that will pave the way for new digital domains which will transform their business models.

Africa is best positioned to benefit from socio-economic and technological advantages of connected devices, notably with a penetration rate of more than 83%. The Internet of Things (IoT) will have a positive impact on all sectors of Africa, especially the transportation sector that will be improved thanks to intelligent sensors that will determine traffic models, as well as the agricultural sector that will evolve thanks to sensors that will allow African farmers to reinforce productivity of crops and minimize loss risks.

Consequently, telcos must adapt to this new scenario in order to maintain their competitive advantage on the telecoms market which is already saturated. George Kalebaila, telecommunications, media and IoT research director, IDC, stated that telcos should go beyond traditional connectivity services and offer modern IT services such as unified communications services, Cloud services and data centers. Fierce competition in the telecommunications industry in Africa has pushed some enterprises to find new ways to combat the drop in using traditional voice services.

Kalebaila said: “in West Africa, we can notice a clear trend driven by the saturation of the market, the decrease in revenue sources per user (ARPU), the increase in operational spending and the reduction in profit margins on services. Thus, the IDC expects a consolidation of the market, especially between local ISPs that have 4G LTE frequencies and FTTx infrastructure, and multinational telcos that have a solid financial support.”

Moreover, he added that 5G technologies will play a pivotal role in the region. In light of 4G adoption in the majority of the countries in the region, discussions revolving around 5G networks will help in raising awareness among people who will understand more the potential and expectations of the networks of the future.

While the deployment of 4G networks gains ground in Africa, the availability of spectrum, limited awareness among clients, weak coverage, high tariffs and prices of 4G smartphones remain as fundamental challenges hampering digital transformation in the continent.

“Understanding and monitoring the behavior of clients will help telecommunications companies to personalize and optimize offers provided to their subscribers and will thus consolidate the loyalty of clients,” concluded Kalebaila.

Source: TELECOM Review