An expected drop in data and voice tariffs in South Africa is boosting consumer purchasing power in other Information Technology areas such as devices and software, says Gartner in a new survey report.
A cut ordered by the telecom industry regulator in South Africa has sparked controversy in an industry made up of Vodacom, MTN, Cell C and Telkom SA. Funds saved from the call tariff cut are now projected to be utilized for other communications purposes, analysts say.
South Africa is projected to spend as much as R276.6 billion on IT this year, a 4.3 percent increase on the previous year, Gartner said, further highlighting that most Information Technology segments “are on track to achieve growth” this year.
The Independent Communications Authority of South Africa has directed that mobile operators in the country to lower call termination rates. This is expected to result in a lower mobile voice tariff.
It is against this backdrop that Gartner analysts say “The price of communication services, including voice and data services for fixed and mobile delivery,(will) continue to drop, which enables spending to be allocated” to other IT categories.
An expected drop in data and voice tariffs is boosting consumer purchasing power in other Information Technology areas such as devices and software. According to ICASA, the new call termination scaling will result in a “charge for terminating a call on mobile and fixed location” at 12c and 8c respectively, from October 2018 to September 2019 and at 10c and 5c for the period October 2019 to September 2020.
Although the lowering of call termination rates will be welcome news for consumers in SA, Telkom South Africa has said that this move could force it to cut jobs and funding for service expansion into rural areas.
“If the termination rate on fixed line is cut to 3 cents, it will be a calamity for the business and we will be hard pressed on jobs and certain services,” Sipho Maseko, the Telkom SA chief executive officer was quoted saying at a news conference in Johannesburg Monday.
In line with the declining voice and data tariffs, Gartner says overall spending on communications services in South Africa is projected to represent 43 percent of the country’s IT spending.
"South Africa is playing technology catch-up. After years of neglecting basic data centre requirements, the country’s IT leaders are now drawing attention to their data center system spending,” said John David Lovelock, analyst at Gartner.
The increase in data server system spending this year stems from requirements to overcome a large corporate technology deficit and to modernise data centres, explained Gartner. Spending on IT devices and software in South Africa will increase by 0.9 percent and 10 percent respectively this year.
However, low cloud adoption and underutilisation of strategic consulting and implementation services is seen occasioning a “slow pace” in digital transformation in South Africa overall. The resumption of South African operations by Chinese telecom equipment firm, ZTE, is also expected to be a boon for the SA tech industry.
ZTE has said that a recent ban imposed on it by the United States which had led to the suspension of business operations across the globe including in South Africa had been lifted, allowing it to resume trading.
“The company has implemented all of the compliance requirements and was operating within hours of the lifting of the ban, at full capacity, with a brand-new board of directors and global executive management team,” ZTE said in a statement this month.
- BUSINESS REPORT
