Telkom acquires 75% of Nigeria’s Multi-Links

Telkom is gaining momentum in its plans to march across Africa with a $280m deal to gain control of Multi-Links Telecommunications in Nigeria.

This raises two questions: 1) Why is Telkom spending all of this money expanding internationally instead of investing in providing a superior, lower cost service in South Africa, and 2) How will Telkom manage in an environment where it actually has real competition?

Under-developed Business Travel Could Offer Opportunities

In his address to the African Business Tourism Conference in Sandton, Minister Marthinus van Schalkwyk said that business travel is lagging considerably behind the leisure market, accounting for 5% of the total tourism market.

When you bear in mind that on average business travelers spend three times more than leisure travelers and return to a destination within 5 years, this must surely be an opportunity area. Of course this relies on the fact that business travelers need to, or want to come to South Africa. They will need to come to South Africa if they are doing business with South Africa – so in this sense the hospitality industry is a support or secondary industry to the real driver of businessmen and women to South Africa – business and investment in or with South Africa.

The other side of business travelers coming to South Africa is if they see it as a place to host their meetings and conferences, and in that area we have much to offer as long as we stay competitive with other international destinations. And yes, there’s a lot of competition out there so we need to be able to provide outstanding services at competitive prices.

And of course we can’t hide away from the security issue in our country. These are things we need to address face on to become players in the international economy and to bring benefits, wealth and opportunity to everyone in our country. I refer to the recent survey done by South African Tourism Update (free registration needed for access), an independent monthly trade magazine, in conjunction with the South African Tourism Services Association and other tourism organisations where the results are overwhelmingly conclusive – over a million travelers decided not to come to South Africa because of crime.

The survey conclusion is that crime is holding back the growth of the tourism sector and its ability to create jobs. Natalia Thomson, editor of the magazine asks the thought-provoking question – “where would tourism in South Africa be without crime?” Where indeed! And let’s face it – there are other places in the world to go. But if we get our act together, the tourists and business travelers would come over and over again to our beautiful country with all that it has to offer that is indeed special!

Tourism to South Africa

The tourism industry in South Africa is a significant player in the country’s economy. It brings in money from abroad and is a valued source of employment. Everyone is getting hyped for the opportunities that 2010 will or should bring to the industry. Tourist arrivals are up by 14.5% and from Jan – Sept 2006 over 6 million people visited South Africa.

Tourism Minister Marthinus van Schalkwyk gave 2006 data for SA Tourism in an address to the African Business Tourism Conference in Sandton where he said that Africa had achieved the fastest growth rate of any region worldwide.

A summary of the numbers is:

• There was a 14.5% increase in 2006 from 2005 in tourism arrivals
• Over 6 million (6,055,726) people visited South Africa between Jan – Sept 2006.
• The largest source of arrivals are from Africa – 18.3% are from the African continent.
• The Number of Visitors from specific regions/countries changes as follows:

• North America grew by 9.7%
• Russia grew by 42.4%
• Hungary grew by 24.1%
• Finland grew by 17.4%
• India grew by 17.5%
• Asia grew by 4.5% (“excellent growth” in arrivals from Japan, Thailand, Singapore, but China, Malaysia and Philippines declined)

The Internet Audience Keeps on Growing

Data released today by comScore for January shows that the internet audience worldwide just keeps growing. The numbers are mind-numbing.

There are 747 million people worldwide using the Internet (some sources have it at over a billion), which is up by 10% from the previous year. The largest country is still the US which grew by 2% to 153,447,000. With seven out of ten people in North America accessing the web that market is already saturated with internet users. The same is true for countries like Germany, UK, France and Spain, where the percentage growth is less than 5%.

But look at China and India. They are both growing at phenomenal rates. China is the second largest country after the US in terms of number of people accessing the Internet (86,757,000). Chinese internet users grew by 20% over the year, yet the penetration of the internet in China is still less than 10%. The story about India is similar though less radical. The total internet user population in India is 21,107,000 and it’s growing at 33%.

Africa is a blip on the radar – in the entire continent of Africa there are 33 million users of the internet, which accounts for only 3% of world internet users. (The total number of people who have access to the internet in South Africa is 5 million of which 2.5 million access it monthly. Yet approximately 7.5 million people access South African internet sites each month, which shows strong foreign interest).

Telkom Takes Over Internet Service Provider Africa Online

What do you do when you already own the telecommunications market in your home country? You expand internationally. Telkom has apparently acquired Africa Online, an ISP that operates in ten African countries, including South Africa's neighbours Namibia, Swaziland and Zimbabwe. Telkom will pay R70 million to African Lakes, the UK-based company behind Africa Online.

The penetration of the internet is of course very low outside of South Africa, and there is actually real competition to deal with, so Telkom may find its management competence a little stretched. In South Africa, Telkom's battles with its "competitors" could be likened to a club rugby team who only ever plays against school under-14 teams -- and gets to change the rules depending on the run of play. But out in the real world, there are All Blacks and Lions and more or less level playing fields. With luck, the experience will enlighten senior management at Telkom, and teach them something about customer service.

Perhaps they might even pick up on the economics of abundance -- imagine the impact on Telkom revenues of providing really low-cost web access in South Africa. Imagine the impact on the economy and education...

Business Day article

Neotel gears up for corporate launch

Only five years behind schedule, South Africa's official second fixed-line telecommunications provider Neotel will be launching phone and internet services for business customers from mid-March. Apparently Tata-managed company has already acquired more than a dozen large corporate customers.

They are currently putting together a cable/fibre network and a Wimax/CDMA infrastructure that has the ability to bypass Telkom's stranglehold on home phone lines. Neotel are promising to undercut Telkom's prices (how hard can it be to undercut the highest prices on the planet?) and to beat them on service (again, how hard can this be?).

IOL Technology Article