Four growth challenges for emerging African telcos

by Robert van Breukelen, COO at Itemate Solutions

DODOMA, Tanzania, 25 September 2023 -/African Media Agency (AMA)/- Africa is home to a thriving telecoms industry typified by a small group of very large, dominant telcos – such as MTN and Safaricom – and a highly competitive group of emerging telcos. These telcos play a vital role in the continent’s economic and social development, providing essential connectivity to hundreds of millions of people that lack access to fixed broadband and fibre connectivity.

The GSMA predicts that unique mobile subscriber numbers in sub-Saharan Africa will reach 613 million by 2025, generating $154-billion in economic value.

The more dominant telcos will continue to take advantage of this growth by leveraging technology to develop innovative new revenue streams and business models. From mobile money and fintech services to small business support, entertainment and mobility, African telcos are gearing up for a new phase of diversification and growth following an era marked by market consolidation.

The emerging telco opportunity

For emerging telcos, there is enormous opportunity in refining their service offering to more closely meet customer needs. Consider, for example, that smartphone adoption is not yet at the levels seen in more developed regions. Data indicates that more than half of the 40 to 50 million mobile phones that are shipped to Africa each quarter are feature phones. In the fourth quarter this amounted to 22.7 million feature phones, compared to only 17.6 million smartphones.

In many consumer markets, telco customers also prefer physical over digital services. For example, purchasing scratch cards in the physical form despite the convenience of digital airtime vouchers.

To reach the scale and capacity of their more dominant peers, savvy emerging telcos should leverage their relatively small size to rapidly innovate – intrinsically understanding and meeting their customer’s products and services’ needs.

However, emerging telcos typically face a number of key challenges hampering their growth and undermining the customer experience they deliver. Based on our work with telcos across the continent over the past 15 years, these are four common growth challenges for emerging African telcos:

Challenge #1 – Inventory Management

The nature of telcos’ business models means that physical goods – mobile phones, accessories, and airtime scratch cards – often have to be moved around. If any of the goods become lost along the way, the telco suffers a direct monetary loss.

Critically, this type of stock loss can also affect the customer experience. If a box of scratch cards are lost before they could be activated, a customer may inadvertently purchase a scratch card that doesn’t work. And when they contact a service centre for support, the telco has to choose between disappointing the customer or taking a revenue hit by providing the airtime at a loss.

Implementing serialised product identifiers, with a track and trace solution, provides telcos with full visibility over the movement of goods, and ensures accountability in the event of any stock loss. This saves money and protects the customer from inadvertently purchasing illegitimate goods.

Challenge #2 – Point-of-Sale

For many emerging telcos, in-store payments are still fairly basic, providing little traceability, customer insights or stock tracking. This can hamper their ability to handle customer requests or deliver a positive customer experience.

The adoption of telco-specific point-of-sale technology can make it easier for emerging telcos to cater to customer needs. Itemate’s point-of-sale solutions are tailored to telcos, providing a one-stop shop for customer requests, KYC and payments while enabling full audit traceability, reports and insights. This gives telcos full control over their business.

Challenge #3 – SIM Recycling

Mobile number recycling – or SIM recycling – remains a major challenge for telcos, with even larger telcos recently making news headlines for indiscriminately reusing customer numbers the telcos thought were inactive.

SIM recycling happens when a telco detects a specific mobile number is dormant, and reuse that number for new subscribers. However, the nature of mobile connectivity in Africa is that customers often have multiple SIMs they use for different purposes, like phone calls and mobile money transfers for example. When a telco then recycles that number, the customer suffers not only inconvenience, but sometimes monetary losses as a number linked to their mobile money store of value is recycled.

However, with the right technology in the background, telcos can keep a more accurate record of which numbers are dormant and which ones can be recycled. This prevents customer dissatisfaction while ensuring the telco can utilise numbers optimally.

Challenge #4 – Dealer Management

A strong dealer network is essential to the growth and success of any telco. But a lack of technology can mean some telcos are left blind to the needs and activities of their dealers, which can undermine their growth.

Having the correct technology in place can give telcos visibility over key processes, customer needs and dealer activities that can inform business decisions. By leveraging technology, telcos can drive improvements in the customer experience while ensuring they keep pace with the demands of the market, contributing to their longer-term growth and success.

Technology presents exciting opportunities for African telcos to scale into new capabilities, deliver superior customer experiences, drive greater revenue and grow their market share. As mobile adoption grows and the mobile connectivity plays an increasingly important role in the African economy, telcos that can leverage technology to the greatest effect stand to benefit most.

Distributed by African Media Agency (AMA) on behalf of Itemate Solutions.

About Itemate Solution

Itemate Solutions is a leading provider of customised digital solutions and software platforms, serving clients across ten countries in Africa and the Middle East for over 18 years. Our mission is to provide reliable and cutting-edge digital solutions that increase our clients’ customer base profitably.

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