The overall South African telecommunications services market – excluding interconnect fees but including fixed, mobile, Internet and other data – was worth a total of R99-billion in 2007.
This is according to BMI-TechKnowledge, which has published two market analyses, the Top 350 & Corporate Report and the SME Report.
Tertia Smit, senior telecoms analyst at BMI-T and author of the Top 350 report, says that the two reports provide a comprehensive analysis of the formal business sector's telecoms spend.
The local business environment comprises almost 600 000 companies that are tax registered, with roughly 77 000 of these companies making up the corporate and midmarket sector – defined as organisations with more than 50 employees. The remaining 506 000 companies fall into the SME sector, which is classified as having between two and 50 employees. Non-VAT registered businesses, informal, and occasional businesses, thought to number between 1,7-million and 2,5-million, were not included in the analysis.
"BMI-T segments the overall telecoms spending market into three categories, namely the Top 350 and corporate market, SMEs, and the residential/private and informal business sector. The private and informal business sector constitutes 55% of the total market share, with mobile services making up the bulk of it, while the formal SME segment comprises 18% and the corporate market makes up 27% of the total market," says Smit.
The reports provide detailed spend analyses on telecoms service types. These include overall mobile voice spend including LCR and SMS, and is broken down further into fixed voice spend, internet spend (spend on mobile cellular internet access for PCs, ADSL, ISP fees and other wireless services) and other data spend, incorporating VANS and ISP spend.
In the corporate market the telecoms service type that gained the lion’s share of the spending was mobile voice, followed by LCR, SMS, and fixed voice.
Conversely, SME organisations overall still spend more on fixed voice than other service categories, including mobile services. In the SME market slightly more than half of all telecoms spend is on fixed voice services.
"Under BMI-T's forecast scenario, the overall corporate spend on telecommunications services is expected to grow at an average rate of 6,6% between 2007 and 2012, while the SME market is expected to grow at an average rate of 5,5% over the forecasted period," says Smit.
"Higher growth in data services is the main factor driving corporate growth at a more rapid rate than SMEs. Voice services are expected to slow down, and convergence between fixed and mobile services will continue, and players in both of these arenas will target each other's territory more aggressively, as quickly as the regulatory environment allows this to happen."
The telecoms market is still in the early stages of the radical change that is expected, including the aforementioned fixed-mobile convergence, and a shift in revenue proportions, away from circuit switched tariffed voice towards IP centric voice and data services.
A more established trend is that of fixed-to-mobile substitution. Data services continue to show higher growth rates in both the fixed and mobile markets, for corporate and SME organisations.
"Internet access and value added services exhibit the strongest growth rates. This high growth rate is stimulated, in particular, by the need which Corporate companies have for quality of service and higher bandwidth, as well as having mobile internet connections to allow for an increasingly mobile workforce," says Smit. "Conversely, the fixed voice market is more mature."
Growth overall is attributed to the competitive dynamics within the telecoms market itself, the growth in the South African economy and the resultant increase in the number of both Corporate and SME organisations. While prices per unit of service continue to fall in many service areas, overall market growth is maintained, albeit in single digit rates, due to the need for more services, especially in the corporate market.