African Telcos Must Adapt as Years of Uninterrupted Revenue Growth Come Under Pressure, Industry Expert says

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African telecommunication service providers, who have enjoyed near-uninterrupted subscriber and revenue growth over the past two decades, will need to adapt, especially in a market where the average business lifespan is 12 years, Mariam Abdullahi, Telco Industry Lead at software company, SAP Africa, has said.

Abdullahi has argued that no industry will remain undisrupted in 2018 and the years to come.

In an announcement this week, she stated that for African telcos, the objective is not to simply improve that which is already working.

“African telcos need radical transformation of entire business models in order to become digital supply networks and re-imagine work, resources management, and contingent worker management,” she explained.

Since the advent of the Internet and the more recent emergence of technologies that include machine learning, the internet of things (IoT), cloud computing, and predictive analytics, businesses with exponential growth models such as Amazon, Uber, Airbnb and Kenya’s mobile money platform – MPESA, have entirely transformed their industry sectors almost overnight.

“Thanks at least in part to these companies, customer expectations have ballooned, with modern consumers demanding personalised, efficient service at low cost and with added convenience. Talented employees have also increasingly gravitated toward these companies, putting further pressure on incumbents who suddenly are outperformed and out-innovated at every turn. “Too big to fail” in today’s market is a near-certain recipe for decline and eventual disaster,” Abdullahi added.

As these changes come into play, telco executives across Africa and other emerging markets have scrambled to reinvent their business models in the face of shifting customer demands and the arrival of agile, customer-centric competitors.

Airtel Africa, a telecommunications firm with operations in many parts of the continent, merged its Ghana operations with Tigo Ghana – yet another telco -, and sold off operations in Sierra Leone and Burkina Faso to adapt to rapidly changing market conditions.

Meanwhile, Cell-C, a South African service provider, is seeking investments with fibre network providers to enable its diversification into new service offerings including insurance and media.

Safaricom, Kenya’s leading telco, is building on its much-lauded MPESA platform by diversifying into new revenue streams, including its ‘Little’ taxi service and e-commerce portal ‘Ma Soko’, to claim a greater share of its customers’ wallets.

“Digital transformation in 2018 is not about cutting costs or optimising existing processes. It is a relook of the entire telco business model. It is asking the hard questions: Am I serving my customers in the right way? Are my operations efficient? Is cost-cutting adequate and sustainable? Am I able to hire the correct staff, attract the best talent, and empower them to contribute to an inclusive and innovation-focused workplace?” Abdullahi stated.

She noted that telco executives must ensure their companies’ day-to-day culture drives innovation across the entire business.

“The aim should be on developing personalised services and to deliver such services in a way to meets the demands of an empowered customer base,” she said.

 

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