Positive outlook for telcos

By Alex Kayle, Senior portals journalist

Johannesburg, 12 Mar 2009

The telecommunications sector will be the most resilient against the effects of the economic crisis, according to telecommunications provider leaders, during a panel discussion chaired by Arthur Goldstuck, MD of World Wide Worx, at the ITWeb IT Confidence 2009 Conference.

Richard Came, executive director for Dark Fibre Africa, a provider of telecoms infrastructure, says with increased competition in the telecoms market, many of the smaller players will become absorbed by the larger ones: “Currently there are about 500 licensees, but there are really only 10 real players out there and only four dominant ones. It's going to take massive efforts for the newcomers to overtake Telkom.”

Mike Brierley, CEO of MTN Network Solutions, says he is positive about the Independent Communications Authority of SA handing out licences to telcos earlier in the year, and that bandwidth prices will be further driven down by increased competition: “We've seen a lot of delays in major fibre projects. New [telecoms] backbones will be built to compete against Telkom.”

Getting hammered

Brierley says Seacom's new undersea cables will introduce cheaper broadband tariffs, and international bandwidth prices are also expected to drop significantly. However, he says, the depreciation of the rand will result in Internet hosting prices to increase sharply.

Brierley predicts that while telecoms will be doing well across the board in months to come, hardware vendors are going to be taking a pounding this year, as companies cut costs and reduce spending on capital infrastructure in order to survive the impact of the global economic crisis.

Stefano Mattiello, executive head of enterprise business group Neotel, says some of the biggest challenges in the South African telecoms sector are the high cost of voice and data, lousy service both in network service and customer service, and unreliable network connections.

He criticised the fact that many companies are still using unreliable sources of 3G and ADSL for their mission-critical business applications. He predicts this will change in 2009, as broadband quality improves and more connectivity options become available to businesses.