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High data penetration creates new opportunities in South Africa

Cloud services, mobile advertising and applications will be some of the highest growth segments in the South African telecommunications market, contributing half a billion dollars in new revenue from 2012-2017, according to a new report from Pyramid Research.

The South Africa Telecom Market Forecast, released Tuesday, analyses the South African telecom market in some details, highlighting several key areas of growth now that traditional voice services revenue is flattening.

The report is focused on three main areas of growth – mobile apps, enterprise cloud services and mobile advertising – and their influence on the South African market.

“South Africa is a key market in the Africa and Middle East (AME) region not only because of its size, level of income and maturity, but also because it is the home for key players in the market, MTN and Vodacom in particular,” said Pyramid Research analyst at large, Jan ten Sythoff.

The country is also the landing place of many submarine data cables connecting Africa internationally, which lowers the cost of broadband and increasing the bandwidth both locally and across much of the continent.

According to Sythoff, data is not only the key driver for telecom operators in South Africa, but it underpins the growth of mobile apps, cloud services and mobile advertising.

“Each of these three areas is relatively small, but demonstrates attractive growth rates. Furthermore, oftentimes operators see these areas as strategic, having additional benefits such as enhancing the brand and supporting growth in other areas and improving their competitive positioning,” he noted.

According to Pyramid Research, the South African ICT market is dynamic, strategic and growing fast.

It is one of the key markets in the AME region because of its size and wealth and because it is the home of several important regional telecom players.

South Africa’s low fixed broadband adoption is seen as a major contributor to the dynamism of the mobile data segment, while the increase in bandwidth afforded by new international connections such as WACS (West African Cable System), which came online in May 2012, is enabling lower data pricing and higher bandwidth.

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