Africa: Telecoms’ new land of opportunity
The combination of increasing smartphone penetration, the falling cost of smartphones, and upgrades to network infrastructure have created the perfect recipe for the development of Africa’s telecoms industry, with the rapidly maturing market now seeing strong competition and innovation.
Africa is home to over one billion people, and the demand and availability of cheaper handsets has driven smartphone penetration amongst a population keen to connect. In recent years, MNOs have been working to upgrade their network infrastructure, in order to manage the demand for 3G and 4G services. Mobile phone connections were estimated to reach one billion at the end of 2016, with penetration levels estimated at 81% in June last year.
This environment has created significant opportunities for operators. However, the pace of development is quick, with consumers moving away from traditional voice services and towards those provided by new OTT entrants. As such, telecoms industry players must be flexible and adapt to continue to reap the rewards this market presents.
The data boom
As part of a wider global trend, Africa has seen declining levels of traditional international voice traffic. This is due to greater capacity availability, the falling cost of data plans, and consumers therefore opting to use apps such as WhatsApp, Skype and FaceTime in place of legacy services. This trend has negatively impacted operators’ earnings; previously, international calls were generating significant revenue, with African exchange rates meaning this was even more lucrative for local operators. Data is bought locally through individual data packages, removing the opportunity for MNOs to cash in on international calls.
In 2020, a predicted 57% of Africans will be online via their smartphone. The demand for data-hungry services has driven investment in capacity solutions, which must continue in the coming years to support this trend. National backbones, cross-countries terrestrial fibre and subsea cables are vital to connect cities across Africa, however, its varied geography throws up challenges. Some landlocked countries that do not have access to subsea cables and landing stations continue to rely on satellite connectivity only. In other regions, satellite solutions are required to act as insurance and ensure service continuity for end-users. Network outages are common in Africa, the result of damage to cable or terrestrial fibre, electricity outages and even landing stations being set on fire. The cost of satellite poses an additional problem for many telecoms operators in the region, which cannot afford to have such links that are not fully utilised. The emergence of ‘pay-as-you-go’ pricing options offers a viable solution, allowing operators to only pay for the satellite capacity they use.
The SMS popularity test
The vastness of Africa, as well as its often-challenging terrain, has impeded access for many to essential services such as banking, healthcare and education. However, in recent years, the greater availability of capacity and subsequent data boom has driven the creation of new mobile-based services. Many African consumers, who are unable to easily reach a bricks-and-mortar bank, are now reliant on mobile banking and payments systems. Patient monitoring and instant access to healthcare services via smartphone are expected to drive similar growth in the future.
Whilst the hunger for data has facilitated this trend, a more traditional service remains vital to its efficient delivery - SMS. Banks, healthcare workers and other public and commercial service providers are realising the value of A2P SMS; a vital way of ensuring user verification and authentication. The usage of SMS in Africa as a way for businesses to instantly and securely communicate with customers is part of a worldwide trend. The global A2P SMS market is projected to be worth more than $83bn by the end of 2024, a significant increase from $57.27bn in 2015.
One of the biggest challenges in Africa’s telecoms space is fraud, with SIM box and roaming fraud among the most widespread and financially damaging. SIM box fraud involves the installation of SIM boxes with multiple low-cost, pre-paid SIMs, which are used to terminate international calls through local phone numbers. This leaves the handset user with a significant phone bill, and the operator with a dented reputation, often resulting in customer churn. Revenues are also impacted, as the operator misses out on the cut they would ordinarily get from this call.
Roaming fraud, a sophisticated and highly damaging tactic, can take up to four days to identify by which time the financial harm could be huge. Africa is comprised of 54 countries, each with different roaming regulations and with roaming services in differing levels of development. With many operators’ roaming services in their infancy, fraudsters are more easily able to take advantage of system weaknesses and the vulnerabilities associated with roaming.
With mobility increasing across the whole of Africa and more people travelling for business and leisure, the scope for roaming fraud will likely widen. Tackling this challenge requires industry-wide collaboration. Crowdsourcing tools are available that allow operators to share knowledge and resources, to collectively prevent fraudulent activity to and from networks, and fight a major drain on revenues.
Telecom growth opportunities
Whilst legacy services may be waning, operators can look to offer new services and capitalise on shifts in the telecoms industry.
Increasing mobility in Africa is creating a wealth of Big Data. Collected and analysed intelligently, this can be used to improve and personalise end-user services, allowing operators to build their user base and unlock new market segments.
This mobility will also drive the demand for data roaming services; a major growth opportunity for telecoms players across Africa. Many MNOs do not have such services in place yet due to a combination of factors: the fact that many consumers in the region do not have bank accounts and rely on prepaid subscriptions, and the complex technical set-up pre-paid roamers require. Roaming hub solutions will help improve roaming coverage while mobile operators continue to upgrade their networks and build their own coverage.
Those operators that have launched roaming services also have the opportunity for further revenue growth, by adopting solutions capable of identifying ‘silent roamers’. This will enable the MNO to attract those consumers who ordinarily turn off their roaming as a cost-saving exercise, by offering them tailored, affordable roaming packages based on their individual data requirements and usage.
Finally, the impact of IoT will be felt in Africa as it will across the world, with a huge number of wireless devices, sensors and infrastructure soon to be reliant on high speed, high quality, cross-border connectivity.
Rapid economic, infrastructure and technological developments in Africa have created an environment ripe with opportunity. By looking beyond traditional services and adapting to change, operators can grow, innovate, and improve connectivity across the region.
GfK and VMware: Innovating together on hybrid cloud
GfK has been the global leader in data and analytics for more than 85 years, supplying its clients with optimised decision inputs.
In its capacity as a strategic and technical partner, VMware has been walking GfK along its digital transformation path for over a decade.
“We are a demanding and singularly dynamic customer, which is why a close partnership with VMware is integral to the success of everyone involved,” said Joerg Hesselink, Global Head of Infrastructure, GfK IT Services.
Four years ago, the Nuremberg-based researcher expanded its on-premises infrastructure by introducing VMware vRealize Automation. In doing so, it laid a solid foundation, resulting in a self-service hybrid-cloud environment.
By expanding on the basis of VMware Cloud on AWS and VMware Cloud Foundation with vRealize Cloud Management, GfK has given itself a secure infrastructure and reliable operations by efficiently operating processes, policies, people and tools in both private and public cloud environments.
One important step for GfK involved migrating from multiple cloud providers to just a single one. The team chose VMware.
“VMware is the market leader for on-premises virtualisation and hybrid-cloud solutions, so it was only logical to tackle the next project for the future together,” says Hesselink.
Migration to the VMware-based environment was integrated into existing hardware simply and smoothly in April 2020. Going forward, GfK’s new hybrid cloud model will establish a harmonised core system complete with VMware Cloud on AWS, VMware Cloud Foundation with vRealize Cloud Management and a volume rising from an initial 500 VMs to a total of 4,000 VMs.
“We are modernising, protecting and scaling our applications with the world’s leading hybrid cloud solution: VMware Cloud on AWS, following VMware on Google Cloud Platform,” adds Hesselink.
The hybrid cloud-based infrastructure also empowers GfK to respond to new and future projects with astonishing agility: Resources can now be shifted quickly and easily from the private to the public cloud – without modifying the nature of interaction with the environment.
The gfknewron project is a good example – the company’s latest AI-powered product is based exclusively on public cloud technology. The consistency guaranteed by VMware Cloud on AWS eases the burden on both regular staff and the IT team. Better still, since the teams are already familiar with the VMware environment, the learning curve for upskilling is short.
One very important factor for the GfK was that VMware Cloud on AWS constituted an investment in future-proof technology that will stay relevant.
“The new cloud-based infrastructure comprising VMware Cloud on AWS and VMware Cloud Foundation forges a successful link between on-premises and cloud-based solutions,” says Hesselink. “That in turn enables GfK to efficiently develop its own modern applications and solutions.
“In market research, everything is data-driven. So, we need the best technological basis to efficiently process large volumes of data and consistently distill them into logical insights that genuinely benefit the client.
“We transform data and information into actionable knowledge that serves as a sustainable driver of business growth. VMware Cloud on AWS is an investment in a platform that helps us be well prepared for whatever the future may hold.”