As South African telecommunications companies grapple with significant challenges, hope is on the horizon. Recent reports highlighted woes as telecommunications giants were left reeling from the effects of load shedding on infrastructural maintenance, and the rising cost of living bringing about a more frugal consumer.

By Nitesh Sing, communications, media and technology (CMT) lead for Accenture, Africa

In 2023 alone, telecommunications companies were expected to spend over R1,1-billion on diesel to keep generators running. Furthermore, their expansion into the rest of Africa has hit a stumbling block, particularly in Nigeria where rising inflation is affecting affordability.

While these issues are unique to South Africa, where load shedding and infrastructural failure are crippling the economy and massively impacting both public and private service delivery, Communication Service Providers (CSPs) are facing difficulties globally.

Our survey titled “From Survive to Thrive: Achieving Tech Transformation for Communication Service Providers’ Future”, shows that CSPs are facing a grim future characterised by limited growth and rising network infrastructure costs with their IT total cost to operate (TCO), IT opex, and capex predicted to increase dramatically between now and 2026.

Fundamental issues underlying this outlook, according to our report, are large IT maintenance and operational costs, as well as slow and expensive new-service creation.

Complexity is also an issue, as 63% of CSP executives admit that their companies are struggling with the complexity of IT systems associated with the current product and service portfolio. In the South African context, where these complexities are compounded by dire economic factors, the need to transform the way CSPs operate both internally and externally is crucial.

Like our international counterparts, South African telecommunications companies need to recognise the value of modern IT systems in streamlining processes and creating flexibility and innovation. Failure to transform means missing out on future growth opportunities.

Fundamentally, transformation begins with a strong digital core, powered by cloud, data and AI, open technology architectures and interoperability. According to our Reinvention in the Age of Generative AI report, some CSPs are way ahead of the curve. The report shows that a small number of companies called “Reinventors” (9%) have established a digital core as a primary source of competitive advantage and met the high bar of building the capability for continuous reinvention.

Simply put, the seven key components of a digital core for growth are platforms, data, AI, integration, cloud, security, and IT operations. These elements cannot be introduced as fragmented parts but must be coalesced into a whole for ease of operation across multiple divisions. This eliminates complexity and eases the introduction of updated systems as the technological landscape continues to evolve.

This process is not without its challenges. Holistic IT transformations entail significant, long-term organisational changes. Despite their potential benefits, many telecom companies have been hesitant to embrace such transformations, often viewing them as isolated upgrades rather than ongoing processes.

Key challenges for these firms include organisational-wide change management, budget constraints, and cultural resistance. Collaboration between business and IT teams is crucial to navigating these challenges effectively and minimising disruptions to customer services.

Moreover, reliance on third-party software and rigid budget allocations further complicate transformation efforts, hampering adaptability and hindering ROI measurement. Addressing cultural barriers and fostering broader technology skills are essential for fostering innovation and collaboration within these companies.

To establish a robust data foundation atop legacy IT infrastructure, organisations must consolidate disparate data sources into a centralised platform. This platform serves as the “single source of truth” for data-driven decision-making. Central data governance ensures security, compliance, and consistency across multiple domains.

Leveraging AI-powered decision engines fuelled by foundational data products enables a myriad of data-driven use cases. Establishing an innovation factory facilitates the continuous identification, incubation, and scaling of these use cases, driving both automated operations and the development of new business models and revenue streams through automation and actionable insights.

International research provides valuable insights into how our global competitors are keeping up with sweeping technological changes, but they are not always useful for local comparison, particularly as South African telecommunications companies face unique challenges.

Successful change comes with a clear technology strategy and value-focused mindset agreed upon by both IT and business teams; regular architecture reviews, standardised investment valuation, and KPI accountability; and a people-first mindset prioritising effective training and collaboration.

The last point is particularly important to note as South Africa lags in the IT skills necessary to achieve a successful and lasting transformation. Investment in education in this area should be a priority for telecommunications companies.

While change can be a terrifying prospect, particularly in the face of economic uncertainty, with the right expertise and tools at their disposal telecommunications companies have the potential to thrive and adapt to a rapidly evolving technological landscape. Hope for an uncertain future lies in their willingness to dive in and embrace change.