Business is looking good, according to Multisource’s CEO Richard Smuts-Steyn, who spoke at the company’s annual open day, TechNiche 2011.He noted that 2011 has been a financially sound year thus far, with identical levels of profitability as 2010, but with significant investment into XConnect, one of the new joint ventures brought on board last year. Similarly, large investments were also made into new partnerships with Samsung and STM.

This year was the fourth annual TechNiche event, with attendance up 30% on last year, despite the previous 12 months being very challenging to all in the telecoms market. “It’s an industry that is truly in flux, is aggressive in both its demand for technology as well as cost consideration, and is shaped not only by local trends, but also by international influences and technological norms,” said Smuts-Steyn.
“Multisource has done much over the last two years to respond to those market influences and to either change or adapt its business model accordingly,” he added.

Over the last 12 months, some interesting trends have emerged, explained Multisource. NXD and dPMR have become the leading trends in two-way radio; and a significant IP evolution, in terms of backhaul and voice traffic, has influenced GSM backhaul optimisation. The company also predicted WiMax (802.16m) and LTE will dominate the future of wireless communication.

Cost consciousness in a growing market

Smuts-Steyn highlighted the increasing demand for carrier-grade backhaul. “If you review the data centricity of the market in 2010, you will notice a 2 000% growth in data backhaul from 2G. With this demand for carrier-grade backhaul, there has also been a strong push towards addressing the total cost of ownership of backhaul,” he noted. National carriers and large Internet service providers previously sought differentiation and profitability through aggressive geographic rollout of basic services, and consequently sought to ‘own’ their own basic infrastructure. Smuts-Steyn stressed: “Additional price pressures exerted on the voice market have seen much more cost-conscious telecommunication companies throughout the African continent.” He said this older philosophy was fast giving way to one of strict cost control and outsourcing of infrastructure to focus their creative skills on new services.
Market saturation, declining subscriber growth

Operators in the more advanced markets across Africa are currently pursuing value added services and data products, while telecoms in less advanced markets are seeing a strong push towards penetrating the deep rural and previously disconnected market segments, through STM rural base stations.

Smuts-Steyn said: “With increasing competition and declining margins coming from pure data services, smaller ISPs are no longer able to see sustainable profits from data only. The market will drive the survivors into a value added and voice market. In many cases, this requires improved interconnection services to cater for carrier class wireless communication.”

Massive growth within Africa

Telecommunication services across Africa are coming of age, and seeing an explosive growth that can only be served in the short to medium terms through wireless communication. “Even the perceived ubiquitous GSM coverage is not there. There are many African countries with less than 50% geographic coverage of mobile communications (but over 80% population coverage),” said Smuts-Steyn.
In order to ensure that continental growth continues, the African telecoms market needs greater investment and partnerships to bring cutting-edge technology that can reduce long-term costs, he concluded.