Due to South Africa’s economic status, the number of small to middle enterprises (SMEs) is much larger than the number of big enterprises. Our research has shown that some SMEs use consumers’ packages with WIFI routers, sharing data services among staff to reduce costs. This means that our 2C subscribers’ analysis also includes some demands/subscribers from SME.

When we investigated the wireless 2C market, we found that the numbers of prepaid subscribers is considerably larger than the number of postpaid subscribers (in Table 3), likely because of South Africa’s current economic situation in SA, in which many lower-income people can only afford prepaid services, as the postpaid service package is often more expensive and needs to be paid monthly. Although postpaid subscribers produce more profit, the large number of prepaid subscriber forces operators to focus on this market segment.

The operators have to drop unit/package prices to keep their market share and number of subscribers. Their price changes are listed as below for reference (in Figures 3(a)-(c)).

2B customers normally take advantage of MIFI routers (inserting a sim card as uplink) to provide data services for their staff. The substantial difference in size between 2B and 2C comes from the data package policy.

All of the operators are becoming more aggressive in their advertising strategies, launching many attractive Wireless Home broadband offers in an attempt to gain more market share in the South African Telecom market (in Figures 4(a)-(d)).

As previously mentioned in Background Introduction, each person in South Africa has an average of 1.7 SIM cards, so operators compete vigorously in the sector that generates high and stable profits: the 2C postpaid subscribers. After CellC sold their postpaid subscribers to VDC, the competition of postpaid subscribers is now between VDC and MTN, as other operators have only won a small number of postpaid subscribers. Most of the competition occurred in the prepaid subscriber market due to the current postpaid market situation in SA.

➢ Online market competition:

Due to COVID-19, online sales channels now play an important role; consequently, nearly all of the operators have invested money and labor to develop their online market (in Figures 5(a)-(d)).

➢ Price competition:

Our investigation shows that CellC has recently started a price war (in Table 4), which we believe will increase the number of requirements from subscribers.

A comparison of the trends our market research has identified in South Africa to those in Europe and East Asia shows that operators have tried to decrease the unit price per Giga in order to enlarge the consumer market. The price war will enlarge the demand pipeline and concurrently benefit both operators and subscribers.

The demand for wireless data services is growing in both the 2B and 2C markets. In Europe and East Asia, Artificial Intelligence (AI), Internet of Things (IoT) and other new services are placing new demands on the big data pipeline (in Figure 6(a), Figure 6(b)). AI will be a revolutionary feat of computer science, and is likely to become a core component of all modern software over the coming years. The strengthening link between AI and Big Data will produce a huge demand on data services when it becomes more developed in the Ecosystem/Industry. This trend will be also layer apply in South Africa as SMEs and big companies continue to grow.

Data bundle services in the wireless market, such as online shopping and online education, have grown explosively in Europe, the USA, and East Asia.

My research suggests that almost all operators have benefited from the impact of COVID-19; the only difference will be the percentage in which the use of airtime/data services will grow among the different countries and operators.

* Data source: online/offline advertisement of operators.

Our research into the data services of the South African telecommunication market report (IDC*) shows that the percentage of data kept increasing while the percentage of airtime kept decreasing. In particular, between 2014 and 2016, fixed networks (FTTx) connections grew at a compound annual growth rate (CAGR) of 70%, albeit from a low base. We predict that FTTx connections will continue to grow, while xDSL connections will experience a sharp decline.

Open Access policy has created a new market opportunity, which has eroded the value of traditional operators. Investing in open access fiber not only delivers macroeconomic benefits to this country but also provides better customer experiences to end-users. The South African Telecom ecosystem has experienced investment from several multi-party entities including energy companies, municipalities, real estate companies, and infrastructure investors. Cost synergies of up to 25% were created by using the existing utilities’ infrastructure. Since retail operators have access to the same underlying wholesale fiber infrastructure, the take-up rate and overall operational economics have improved.

As open-access fiber gains acceptance, traditional fixed network operators need to adjust their fixed broadband strategies accordingly. Traditionally, incumbents resisted partnering with open access fiber entities by accelerating their fiber rollout, whether fiber to the home (FTTH) or fiber to the curb (FTTC). Recently, however, some incumbents are trying to gain higher market shares by acquiring open-access fiber or finding partners through wholesale and whole-buy agreements. Challenger operators are proactively forging partnerships with open access fiber entities, whilst aggressively trying to expand their fixed broadband offerings to gain market share in what was traditionally the incumbents’ turf. Non-telcos, especially energy and utility companies, are seeing new business opportunities in operating open access fiber in selected markets as well as fiber infrastructure.

According to our research, South Africa’s fixed broadband speeds are on average 85% lower than global players (in Figure 7(a), Figure 7(b)).

The initial addressable market in South Africa was around 3.65 m households (in Figures 8(a)-(d)). Fixed Network Operators (FNOs) are moving beyond the traditional middle-income areas to more highly densely populated areas. The latter increases the addressable market size by approximately 3.5 times. FNOs have amended their business models so that their deployment cost and degree of competition are lower. Furthermore, their customer base is less complex and less demanding. Vumatel is far more aggressive than other operators, and so it has reached 1M home passes (HPs) in five years.

As the two major players in the South African fiber market, Vumatel and Telkom (Openserve/Consumer) will continue to compete extensively. After Vumatel passed SA Telkom to become the largest provider in the South African fiber market, SA Telkom rushed to take back the first-place ranking by competing in coverage and price wars (in Figure 9(a), Figure 9(b)).

The Fiber 2B market is extremely similar to the wireless market. Many 2B customers use a 2C package, so some 2B customers have been counted as 2C subscribers. Even in townships, some people buy or rent 2C packages from operators—either fiber or wireless—over which they drive 2B services. Due to security issues in townships, we cannot collect detailed data regarding this practice.

One of COVID-19’s impacts on the economy is that more people are working from home, and this in turn has resulted in the following behavioral trends: demand symmetrical bandwidth has increased; the peak periods are no longer from 6pm to 10pm but last the entire day, beginning at 9am; and bandwidth utilization has increased from 40 GB to 400 GB in two years.

Currently, BCX and SME, subsidiaries of SA Telkom, are aimed at 2B customers. SME focuses on small to middle-companies, while BCX aims at big customers. They customized the data/airtime packages for different customers, receiving many orders from companies and South African government departments.

From 2013 to 2019, the formal business sector increased turnover from R7.0 trillion to R10.5 trillion (average annual growth rate: 7.0%) (in Figure 10(a), Figure 10(b)). Medium business increased turnover by 8.4% per year, and large business by 5.4%.

All fixed network operators are still focused on the 2B market due to its market growth (in Figure 11(a), Figure 11(b)). Now as a trend, however, the main players of the fiber market are interested in increasing the percentage of pre-paid customers in order to improve revenue and profit.

As all operators have felt that the market is transforming, they have begun to aggressively roll out fiber. For example, Vumatel delivered 500 k within a year. Vumatel further grew by acquiring companies such as SADV and Fibrehoods. Vumatel not only used DFA vast network coverage but also rolled out services in territories beyond traditional middle-class neighborhoods. They have expanded into high-density lower-income areas by deploying O/H fiber to reduce costs and shorter TTMs. They offer simple prepaid packages to lower-income areas with a limited number of ISPs and monthly top-up options.

While the ROI of the fiber market is not as good as the wireless market, all fixed network operators have to face issues that stem from heavy asset operation. Thus, the competition in the fiber market is not as tough as the competition in the wireless market. In some European countries (e.g., Romania), wireless operators are required to pay license fees while fixed network operators in those countries do not need to pay for fixed network licenses. For fiber market operators, fiercer competition comes from wireless network operators as opposed to other fixed network operators.

As in the wireless market, video/picture services drive the demand for broadband services (in Figure 12(a)-(d)). For a family subscriber, children typically like cartoons, youth prefer networked games, and adults work from home. Operators are all following the trends that changes in the 21^st century bring.