Robert van Breukelen, the Chief Executive Officer of Itemate Solutions, a South Africa-based software company has provided four reasons he believes emerging African telcos are not able to scale and innovate in line with dominant peers.
Breukelen in an email message noted that although there is major potential for emerging telcos to innovate, countries in Africa have typically faced the same barriers to growth. These include:
- Inventory Management: the nature of telcos’ business models means that physical goods – mobile phones, accessories, and airtime scratch cards – often have to be moved around. If any of the goods become lost along the way, the telco suffers a direct monetary loss.
- Point-of-Sale: for many emerging telcos, in-store payments are still fairly basic, providing little traceability, customer insights or stock tracking. This can hamper their ability to handle customer requests or deliver a positive customer experience.
- SIM Recycling: mobile number recycling – or SIM recycling – remains a major challenge for telcos, with even larger telcos recently making news headlines for indiscriminately reusing customer numbers the telcos thought were inactive.
- Dealer Management: a strong dealer network is essential to the growth and success of any telco. However a lack of technology can mean some telcos are left blind to the needs and activities of their dealers, which can undermine their growth.
Running a background to his thoughts, Breukelen argued that Africa is home to a thriving telecoms industry typified by a small group of very large, dominant telcos such as MTN and Safaricom.
He said these telcos play a vital role in the continent’s economic and social development, providing essential connectivity to hundreds of millions of people that lack access to fixed broadband and fibre connectivity. However, there is massive potential for emerging telcos to thrive in the market, as several African telcos are gearing up for a new phase of diversification and growth following an era marked by market consolidation.
“For emerging telcos, seizing the opportunity to refine their service offering to meet customer needs more closely is crucial. Savvy emerging telcos have the opportunity to leverage their relatively small size to rapidly innovate and reach the scale and capacity of their more dominant peers,” he said.