Why having more competition in the telecoms industry could backfire

Ray White asks Steven Ambrose, MD of Atvance Intellect, why having more telecommunications players could be a bad thing.

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What is the future of the telecommunications industry in South Africa, and on the continent as a whole?

Ralph Mupita, CEO of the expanding MTN Group, believes the days of having four to six players in the telecoms market are coming to an end.

"Consolidation is inevitable" Mupita said during a webinar that formed part of PSG's "Think Big" digital series.

RELATED: MTN revenue surges, subscribers grow to 272 million across Africa

Ray White (in for Bruce Whitfield) interviews Steven Ambrose, MD of Atvance Intellect.

Any form of telecommunications, be it data, voice, whatever, is a scale business. It's a business that works on massive numbers, on huge amounts of physical infrastructure - from the cellphone towers to the fibre-optic networks that connect the towers, to the interconnection around the world...

Steven Ambrose, MD - Atvance Intellect

Globally, the trend is for fewer players in the infrastructure and delivery of service layer of the industry, says Ambrose.

Where more players tend to get involved is on the customer service side.

Virtual mobile operators, people who differentiate themselves, have a group of likeminded people to tie them directly with cellular and data services - that's where a lot of proliferation has happened.

Steven Ambrose, MD - Atvance Intellect

In the case of South Africa, and Africa, MTN and Vodacom and their main owner Vodafone have tended to dominate simply because of the sheer scale of what it is that they deliver... and the price and cost of doing so.

Steven Ambrose, MD - Atvance Intellect

They're buying massive equipment from three or four suppliers globally and they're supplying a service that's become, I believe, essential.

Steven Ambrose, MD - Atvance Intellect

Telecommunications has become an essential service for the operation of our modern society, comments Ambrose.

He believes having too much competition in many cases, could backfire.

"More competition in this space could mean fragmentation and greater cost for people, and lower efficiency."

Listen to Ambrose's argument in the audio clip below:

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