First tier ISPs do battle
MTN recently announced that it had entered into an agreement with Verizon Business to acquire 100% of Verizon South Africa. The company said that the acquisition was in line with its strategy to provide integrated communications solutions in all of its markets.
MTN SA’s managing director, Tim Lowry, said that MTN would merge its existing first tier ISP MTN Network Solutions with Verizon Business to create a new MTN-branded service provider.
This new MTN ISP will have a corporate market share of around 10% to 12%, something which Lowry says the company is confident that it can grow through its ability to provide true Pan African solutions to both local and international companies.
Research group Frost & Sullivan believes that the move is an example of MTN’s ability to make smart expansion decisions.
"The increasingly converged nature of the telecommunications industry means that market participants have to reposition themselves to provide an offering suitable to changing market requirements. MTN embarked upon a repositioning strategy with the launch of the MTN Network Solutions business that enabled the company to offer networking services to business clients,” said Frost & Sullivan ICT industry analyst Lindsey McDonald.
“The company’s acquisition of Verizon Business is another step towards the provision of a converged service offering.”
MTN’s acquisition of Verizon Business SA brings some consolidation in the market, but this certainly does not signal any lack of future competition. Neotel and Vodacom Business are new entrants into the converged services markets and they are already aggressively targeting corporate clients.
Vodacom Business has also recently indicated that it plans price reductions up to 80% of traditional international connectivity which will basically change the current business models of traditional ISPs and network service providers such as Internet Solutions and Verizon Business.
The new MTN NS – Verizon Business entity will however be well positioned to do battle on all fronts because of the ability to bundle cellular and ISP products as well as making the most of its current and future fibre infrastructure.
MTN is already carrying some traffic over its fibre network in Johannesburg and is progressing well to build both a metropolitan and a full national fibre network.
Currently the corporate ISP services market is dominated by Telkom and Internet Solutions, but it is likely that the market share percentage will change over the next year or two with MTN, Vodacom Business and Neotel aggressively rolling out services and targeting the big spenders in industry.
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