The South African telecommunications market is becoming more competitive but at the same time there is a great deal of consolidation taking place. Over the past two years many acquisitions were made by bigger players, both taking out competitors and expanding their product offerings.<\/p>\n
A few high profile deals include Vox Telecom buying Orion, Storm, @lantic, and ABSA Internet, Vodacom buying Gateway Communications and MTN is finalising its acquisition of Verizon Business SA.<\/p>\n
This leaves only a few large players – like MWEB, Internet Solutions and Vox Telecom – to take on the incumbents: Telkom, Vodacom, MTN, Cell C and Neotel. MWEB is however likely to be purchased by a large company soon.<\/p>\n
Speaking at the BMI-T Telecoms conference in Midrand, MTN Network Solutions’ Mike Brierly said that building infrastructure was a must to ensure MWEB’s value proposition, something which Naspers may not want to fund. The logical choice was therefore to sell this ISP business unit, and unsurprisingly Naspers announced earlier this year that it will auction MWEB.<\/p>\n
According to an industry source, Altech is the front runner to acquire MWEB. Vodacom Business, Vox Telecom and Dimension Data\/Internet Solutions have apparently all pulled out of the process after it reached a point where they felt that MWEB is overvalued.<\/p>\n
Brierly confirmed Altech’s status as the front runner to acquire MWEB – a deal which he expects to be announced soon. Brierly also predicts that Vodacom will acquire the rest of iBurst\/WBS, a company in which they already own a stake.<\/p>\n
Who will survive?<\/strong><\/p>\n The increased consolidation in the local telecommunications market begs the question: who will dominate this space in coming years?<\/p>\n Brierly said that he expects Vodacom, MTN, Telkom and Neotel to dominate the market over the next few years. He also feels that Cell C, Internet Solutions and MWEB may become significant players and should be closely watched.<\/p>\n This view is shared by Dark Fibre Africa’s executive director, Richard Came, who said that he expected only three or four large telecoms players to be around by 2012. Vodacom Business’ Ermano Quartero is less lenient and feels that there will only be place for three big telecoms companies in South Africa.<\/p>\n This however does not mean that there is no place for smaller players. Brierly predicts that small companies, typically ISPs, targeting niche markets will continue to flourish. Although they are expected to only capture a small percentage of the market, they will remain profitable and have opportunities to grow.<\/p>\n Richard Came further expects new type on entrants in the telecoms space like metros, e-commerce players, telemetry providers, large enterprise and industry VANS.<\/p>\n