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Telcos must adapt – fast

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No industry will remain undisrupted in 2018 and the years to come. But for African telco providers, who have feasted on near-uninterrupted subscriber and revenue growth over the past two decades, the need to adapt is paramount, writes MARIAM ABDULLAHI, Telco Industry Lead at SAP Africa.

In a market where the average business lifespan is 12 years (compared to 25 years in the last two decades) 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.

Since the advent of the Internet and the more recent emergence of technologies that include machine learning, IoT, cloud computing, and predictive analytics, businesses with exponential growth models such as Amazon, Uber, Airbnb and 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.

Telco execs heeding the call

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 merged its Ghana operations with Tigo Ghana and sold off operations in Sierra Leone and Burkina Faso to adapt to rapidly changing market conditions. South Africa’s Cell-C is seeking investments into fibre-to-the-home providers to enable its diversification into new service offerings including insurance and media.

Further afield in India, LTE and Voice-over-LTE operator Jio acquired 100 million subscribers in only six months by offering free voice services for life to its customers, prompting a sudden merger between Vodafone India and Aditya Birla Group’s Idea operations to form India’s largest telecoms company.

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

These companies have already felt the effects of declining traditional revenue streams as disruption from the likes of OTT players such as WhatsApp, Skype and YouTube put pressure on what was until recently primary (and highly dependable) sources of revenue. According to PwC, many telco operators globally are seeing revenue drop-offs of as much as 30% in SMS, 20% in international voice, and 15% in international roaming. Incremental improvements and operational changes are no longer enough. Those that can adapt to take advantage of technology megatrends such as hyper connectivity, cloud computing, and IoT are far better placed to reinvent their business models and can further incorporate Software Defined Networks and Network Function Virtualisation to speed up the innovation cycle.

The nature of transformation in 2018

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?

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. The only way to do that is to have access to the correct customer insights – such as data usage and consumption habits, call volumes, area of residence – and to act on such insights in a humane and personalised manner. For this, analytics and data are key, especially when matched to an in-memory computing platform that enables real-time actionable insights.

At a time when telco offerings are highly commoditised and there’s not too much distinguishing one operator from the other, telcos need to simplify their core business operations to allow for the development of a clear unique value proposition for sustainable growth that takes local conditions into account. For example, with so many African countries not yet fully adopting 4G technology, does it truly make sense to invest heavily in emerging 5G technology?

The African telco market has moved away from improvement to large-scale disruption and transformation. Telcos who embark on a process of total business model change underpinned by powerful exponential technologies will be far better placed to withstand and overcome the challenge posed by the new breed of disruptors.

2018 will determine who adapts, maximises on operational efficiencies, leverages innovation for new revenue streams and who relies on old ways of doing businesses that negatively impacts their Go To Market offerings.

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AppDate: uKheshe bring banking to the masses

In his apps roundup, SEAN BACHER highlights uKheshe, FNB’s banking app with its will feature, Split Payments, Momentum Safety Alert and Fleetonomy.

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uKheshe micro transaction platform

Financial inclusion took another step forward as local start-up, uKheshe, South Africa’s cheapest and most convenient QR cash card and micro transaction platform, won the 2019 Global Fintech Hackcelerator @ Southern Africa competition. 

“The issue of financial inclusion is a global one and the more we can do to uplift the unbanked and under banked, the healthier their respective economies will become,” says Clayton Hayward, co-founder, uKheshe.

While 1.2 billion people have opened a financial account since 2011, there is still an estimated 1.7 billion adults worldwide (or 31% of adults) who don’t have a basic transaction account.  Globally, two-thirds of adults without an account cite a lack of money as a key reason, which implies that financial services aren’t yet affordable or designed to fit low-income users.

To find out more about uKheshe click here

FNB’s banking app with will feature

First National Bank now lets its customers draw up their own wills via the FNB Online Banking platform at no cost. To date, the bank has seen a significant increase in the number of clients who drafted their own wills online, with over 52 000 clients already accessing the functionality.

Approximately 80% of South Africans don’t have a valid will in place; and many people believe that it’s a need only when they get older, or later in life. 

“Whilst the digital process is simple and easy to use, the solution also helps with a dedicated client support centre should clients need further assistance or advice regarding the drafting of their wills,” says Johan Strydom, Growth Head, FNB Wealth and Investments. “The solution aims to simplify the process and allows customers to easily draft a will online anytime and at any place, at no cost. In addition, FNB will keep your original will in safe custody at no extra cost.”

Platform: Android and iOS

Expect to pay: A free download

Stockists: Available the FNB app which can be be downloaded here.

Split Payments

PayFast has launched Split Payments, a South African-first that instantly splits a portion of an online payment with a third party. The service is designed to facilitate fast, safe payments for platform-based businesses, including online marketplaces.

For those who run a marketplace that brings together multiple sellers or merchants looking for new sales channels, Split Payments addresses payment headaches with a simple API integration.

Consumers are used to engaging with large global transactional platforms such as AirBnB, Uber, and Amazon. The benefits and extended reach of these types of platforms are catching on locally, and organisations like estate agency groups and even community marketplaces are setting up digital trading platforms.

The app allows businesses to instantly split out commission, membership or listing fees, when a payment is made via one of its supported payment methods.

For each online payment received  the business can determine what the split is, either a fixed amount, a percentage, or a combination of both. Custom recurring payment integration, such as subscriptions payments, can also be split automatically.

Platform: iOS and Android

Expect to pay: A free download

Stockists: Download Split Payments here

Read more about Momentum’s new Safety Alert app and Fleetonomy.

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Why 4G is still a thing

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Even with the 5G era already upon us, investment in 4G/LTE networks is still vitally important for operators in sub-Saharan Africa and must remain a core focus of network construction for the immediate future. This is according to David Chen, Vice-President, Huawei Southern Africa. 

“Currently, the mobile broadband penetration rate in Africa is only 47%, while 4G penetration rate is merely 10%,” Chen said.

“Insufficient coverage causes LTE users to fall back to the 2G or 3G networks, resulting in significant decline in user experience. It also leads to congestion on the 2G and 3G networks and makes it difficult to release spectrum used by 2G and 3G.”

Chen said that LTE and 5G complement each other and are evolving in parallel. In the next few years, 5G will mainly be used in more industrial communications.

LTE will remain the primary choice for global mobile communications through 2025. It will form the basic layer of national networks, especially when it comes to the mobile broadband access.

“It will take a long time for 5G to provide nationwide continuous coverage. Before that, enhanced LTE networks can guarantee optimal user experience for 5G users, including services such as VR, AR, and cloud gaming,” said Chen.

He said that it is important for operators to invest in 4G to secure future growth, as it is estimated that there will be an additional 80 million LTE users in sub-Saharan Africa by 2025.

Driven by this growth, LTE traffic in sub-Saharan Africa will increase by a factor of 8.8. By 2025, about 80% of all data traffic in the region will be over an LTE network.

LTE will also be the main source of future revenue for operators.

“According to GSMA Intelligence, 2G and 3G users in sub-Saharan Africa will gradually migrate to 4G,” said Chen. “By 2025, the proportion of 2G users will drop from 46% to 12%.”

Part of the reason for the migration to 4G is because the ecosystem is mature.

“The price of feature phones supporting VoLTE in the sub-Saharan Africa market has been as low as $25,” Chen said.

Since 5G equipment is already available, there is an opportunity for operators to build out their 4G networks while ensuring that they can evolve to 5G in future.

Chen offered the following tips to operators to ensure they are ready for 5G:

  • All future equipment installations should be 5G ready, allowing easy upgrades to 5G through software updates.
  • Software should support multi-standard spectrum sharing to improve spectrum efficiency, and to allow the smooth migration of 2G and 3G users.
  • Networks must support 4G and 5G coordination, in terms of spectrum, operation and maintenance. This will ensure that users have a consistent experience as we enter the 5G era.
  • The value of existing ICT infrastructure, such as base station sites, must be maximised to avoid overlapping services and wasted resources. This would mean boosting the capacity and coverage of every station for optimum efficiency.
  • Carriers should explore the business case for all possible 5G innovations when building 4G networks, and not just embrace 5G for its own sake. This will mean building business models around IoT, video, live broadcast, augmented reality, and virtual reality.
  • It is important that operators build partnerships with providers that can support the ongoing spectrum evolution with fast site upgrades and large-capacity solutions. The idea is to maximise the value of 4G networks, and smoothly evolve to 5G without unnecessary infrastructure investment.

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