Detecon study: Large European, African expert survey on effects of financial crisis on telecommunications industry

While the financial crisis is darkening the mood of business forecasters around the world, the telecommunications industry in Africa shows little inclination to be pessimistic, according to the results of a recent study from the consulting company Detecon International. More than half of the industry managers surveyed have yet to notice any negative effects on their core business.

Around 50% of the respondents in the survey do expect declines in demand among end customers, but rule out the possibility of price wars in this segment. Exactly half of the respondents in the study, which was conducted in all of Europe and in Africa, see ways to draw out long-term investments in some areas, an opportunity the companies want to exploit for the improvement of their own financial position.

More then 80% of African telco executives believe that financial funds will be a scarce good in the African arena, and some 50% see capital expenditure (CAPEX) liquidity bottlenecks as a real threat to maintaining a course of growth. “The majority of the respondents, both in Africa and Europe, dismiss a price war threat,” says Christoph Klein, co-author of the study, Partner at Detecon and Head of Transaction Services. “So we believe that larger African carriers with strong balance sheets and access to funding will evade really harsh negative impacts,” notes Klein. “But, for many smaller operators in the less strong economies in Africa, this rationale might not apply and they will probably start feeling the biting crisis more seriously during the second half of 2009.”

European and African telecommunications providers alike want to concentrate first and foremost on securing customer loyalty and, by doing so, maintaining the current sales levels to counteract the keen competition within the sector.

The measures being implemented for this purpose include rate bundling and expansions of the available services for the same price. “While other industries are struggling with market collapses, some of them of historic dimensions, the telecommunications market is proving to be hale and hearty,” notes Fritz Milosevic, co-author of the study and Managing Consultant at Detecon in South Africa.

“Compared to their European counterparts, African executives are more inclined to regard the current crisis as an opportunity to grow by mergers and acquisitions,” states Milosevic. “The majority of African executives do not see any necessity for workforce layoff programmes because of their ongoing growth in comparison to Europe.”

The study: “Impact of the Financial Crisis on the European Telecommunications Industry” and additional results of the special African survey are available for downloading free of charge at http://www.detecon.com/financialcrisis/africa.