South Africa: Progress and Problems

South Africa’s mobile networks are all growing their subscriber numbers, with Telkom the latest network to reveal its most recent figures.

Telkom’s interim results for the six months ended 30 September 2017 show it had 4.3 million active mobile subscribers.

This comprises 3 million prepaid and 1.3 million post-paid users.

The table below details the latest available subscriber numbers for South Africa’s mobile networks.

Vodacom	40.0 million
MTN	30.9 million
Cell C	“Over 16 million”
Telkom	4.3 million

Source

According to Telkom their operating revenue was down by 0.6% compared to last year, reaching R20.1 billion.

“The first half of the year was characterized by a tough economic environment and increased competition. Even though South Africa exited the technical recession in the second quarter of the year, business confidence remains very low.”

 Despite the tough conditions, Telkom’s mobile division showed strong growth.

“The mobile business growth trajectory continued in the period with strong growth in active customers and stable ARPUs, resulting in an increase of 43.2% in mobile service revenue,” said Telkom.
“The strong mobile growth which boosted the group’s performance was underpinned by an expansion of our network, distribution, and the launch of innovative products which were well received by our customers.”
“We are pleased that our mobile business received the MyBroadband Best Mobile Broadband Provider of the year award, in the best value for money category.” Source

Market leader Vodacom’s priority must be defending its market share in an increasingly competitive environment. According to Equities analyst Irnest Kaplan  they must offer consumers more value, beyond simply “selling megabytes”. So-called over-the-top players — companies like Facebook and Google — are profiting from the data pipes Vodacom sells; the company needs to develop value-added services of its own, such as quality content, that subscribers are prepared to pay for. Without this, there’s the risk that consumers will simply shop around for the cheapest data rates

He said Vodacom, and the other mobile operators, are in a powerful position in that consumers carry their products in their pocket all day.

 “They should do more to leverage that. It’s hard for them because they are operators and not app developers, but people carry their products all the time, they know where you are all the time — there must be amazing apps they can offer.” Source

Moreoever all the South African operators face issued due to the  impasse over new spectrum allocation. Vodacom may be forced to cut spending in rural areas to densify its network in the more populated urban centres because of this “spectrum crunch”.

This issue needs to be sorted as soon as possible. Technology is the driver of economic growth. Spectrum is vital for the roll-out of new technologies and innovation, which will drive economic growth, create jobs and allow South Africa to take advantage of the Internet of things and the other technologies.

Meanwhile Ericsson and MTN will start a 5G trial in South Africa during the first quarter of 2018.

The companies signed a memorandum of understanding at AfricaCom 2017 to collaborate on the rollout of 5G technologies in South Africa.

MTN will trial a range of 5G use cases and applications as a proof-of-concept for South Africa in its laboratory, which will lead to commercial deployment in the future.

The companies said they will collaborate to identify 5G use cases in industries such as mining, transportation, agriculture, manufacturing, and utilities.

“5G gives us the opportunity to rethink our business and address previously-untapped value chains” 

said Giovanni Chiarelli, CTIO at MTN South Africa.Source

VEON: Rebrand and Revolutionising?

VEON came into existence early 2017, a rebrand of VimpelCom.

The Amsterdam-based telco was first founded in 1992 as Russian operator PJSC VimpelCom.  It took its current form in 2009 when shareholders Telenor and Alfa agreed to merge their assets in VimpelCom and Ukraine’s Kyivstar to create VimpelCom Ltd. In 2010 VimpelCom acquired Orascom Telecom Holding (operating in Pakistan, Bangladesh, Algeria) and Wind Italy from Egypt’s Naguib Sawiris.

VEON is among the world’s 10 largest communications network operators by subscription, with around 235 million customers in 13 countries.The company is in the process of shifting away from being a data services company, to internet via mobile devices.

VEON’s geographical footprint (September 2017) Source: VEON, STL Partners

It operates under a number of brand names in various countries for example: 

Source: VEON, STL Partners

VEON’s largest market is Russia, where it has over 58 million mobile subscribers, making up 24% of its global total. Pakistan and Bangladesh comprise its second largest markets by subscribers, while it has over 30 million customers in Italy under its Wind Tre brand, a joint venture with CK Hutchison.

VEON mobile customers by region, H2 2017 (millions)

Source: Veon, STL Partner

In July 2017, VEON announced that it was making progress in its strategy to reinvent itself as an online player by introducing its messaging and mobile services app in four new markets, including its largest in Russia and Pakistan.The messaging app, which is designed to compete with the likes of Facebook Inc’s WhatsApp and Rakuten Inc’s Viber, offers free services to customers via its mobile network without users incurring data charges as other apps do. According to Mark MacGann, VEON’s Group Chief Corporate & Public Affairs Officer : 

"VEON is not just communication application. It is a complete platform. We promise to completely revolutionise the digital landscape of the country and how Pakistanis communicate. We aim to disrupt the market and redefine the personal internet experience by offering diverse services to our subscribers like access to information and services and engage with the world even when they are out of balance. VEON will create its unique position in the market in the months and years to come."

At the end of October 2017 VEON announced that its App had reached 1 million downloads, in Pakistan, in the just the span of 19 days.

Two more markets where VEON will offer the app are Ukraine and Georgia. VEON aims to offer basic communication for free, while taking a cut of proceeds from partnerships with popular internet services it offers through its app, using data insights it can glean as a network operator.Deals are expected to range from streaming music to ride-hailing to retail to financial services offers. Early partners have included music streaming service Deezer and credit card company Mastercard.

It will be fascinating to monitor future developments with this operator and its markets.

The 4G explosion in China

The popularity of 4G mobile services in China continues to increase and subscriber growth shows no signs of slowing down. In fact China has built the world's largest 4G network within just four years and is aiming to add 2 million 4G base stations, mainly for townships and villages, by 2018. China began a campaign aimed at faster and more affordable Internet connection in 2015 resulting in a total of 950 million 4G network users as of the end of September 2017, according to figures from the Ministry of Industry and Information Technology (MIIT).

Served principally by three mobile network operators, China’s mobile sectors are largely divided along technological lines. China Mobile - currently the largest operator by subscribers focuses on the locally-developed TD-LTE 4G standard.  While rivals China Unicom and China Telecom have gone for a mix of TD-LTE and frequency division duplex LTE (FDD-LTE). 

According to Shang Bing, chairman of China Mobile the operator has pursued a strategy of 'Big Connectivity' and invested about CNY450 billion ($66 billion) over the last three years to build  the world’s largest 4G network. Its 4G user base reached 583 million in May 2017, with 4G penetration at 67.5 per cent. “One in four 4G users in the world is a China Mobile user.” It has deployed 1.6 million 4G base stations, or about 30 per cent of the global total, Shang said. Its 4G coverage will reach 99 per cent of the population by the end of the year, when its LTE base station count rises to 1.77 million.

China Telecom’s 4G user base doubled last year to 122 million, with LTE subscribers accounting for 57 per cent of its mobile connections and deploying 1.05 million base stations, while China Unicom’s 4G subs rose from 44.1 million at end-2015 to 104.5 million, representing 40 per cent of its customer base, with 770,000 base stations.

So why is 4G so important? Probably because it is a vital foundation for all that is to come:

"Future technologies, including 5G, the internet of things and AI (artificial intelligence) will drive society into the era of the internet of everything. The development of 4G has brought about the prosperity of mobile internet and changed people's lives," 

says  Li Zhengmao, vice-president of China Mobile. Industry pundits insist that 4G has been the greatest achievement in the national information technology sector during the past five years in rural and urban areas.But then the benefits of 4G are not limited to urban areas. Rural regions in China have also been opened up by the service. In Huanggang, Hubei province, farmers can sell their produce online through e-commerce sites, and buy crucial equipment safer and quicker through the network. China Telecom has spent 200 million yuan ($29.46 million) to roll out 1,300 base stations in Huanggang.

The decision has increased 4G coverage rates from 35 percent to 93 percent. It has also helped local farmers with vital agricultural information, as well as alleviating poverty through online education.

Even after all this progress, VoLTE is still long way away. According to a report in summer, China Mobile targets 17% VoLTE penetration this year. China Mobile group vice-president Mr.Liu Aili had said back in 2015, "VoLTE network deployment is the one of the most difficult project ever, the implementation complexity and workload is unparalleled in history"

Its not unreasonable to think that since China has the world's largest 4G market it is the  country that will lead the world in the development and utilization of 5G.