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Telecom consolidation a leading trend for Africa in 2017

Telecom consolidation a leading trend for Africa in 2017

An International Data Corporation (IDC) report has predicted an increase in buyouts of smaller ISP companies as a leading trend within the African telecoms market in 2017.

This has already been witnessed with the buyout of Raha ISP in Tanzania and also Neotel in South Africa both by Liquid Telecom.

The global research and analysis firm also identified West Africa as a market ready for acquisitions.

"Indeed, regional markets are becoming fragmented, with increasing numbers of players offering similar services with limited differentiation. While this saturation trend has forced down prices and benefited the average consumer, it has a long-term negative impact on players such as small ISPs that lack strong financial backing. In the long term, such ISPs will be unable to reinvest in network infrastructure to either improve the quality of service or even expand coverage to other locations," the report said.

Since most telecom companies are looking to launch 4G services, acquisitions will centre on small companies that offer 4G services.

The IDC said, "Therefore, IDC expects some consolidation to occur, especially between local ISPs that possess 4G LTE frequencies and fiber-to-the-'x' (FTTx) infrastructure and multinational telcos with solid financial support. The recent acquisition of Visafone by MTN in Nigeria serves as one prime example of the kind of consolidations expected."

Even so, more telecom companies will also be contemplating how to jump on the 5G bandwagon and IDC expects this to feature more in boardroom discussions.

Another prediction is that most telecom companies will start to evaluate their general business strategies. Since the voice revenue is stagnating across maturing markets, companies will diversify to offer IT services such as unified communications and collaboration (UC and C), cloud, and datacentre services.

The IDC said that this shift may compel the telecom companies to migrate from operating legacy networks to deploying agile systems.

"Telcos that prioritise technologies such as network functions virtualisation (NFV) and software-defined networking (SDN), especially for the delivery of connectivity, cloud, and datacentre services, will be well placed to maximise cost savings, achieve greater efficiency, and increase profitability," the IDC denoted.

Other trends that might be seen over the course of the year include telecom companies opening up their API to third party developers and telcos being the driver for digital disruption to avoid some of their products being overtaken by new tech.

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