Africa’s emerging telcos grapple with brand loyalty, infrastructure costs — van Breukelen, CEO, Itemate Solutions

Africa’s telecommunications ecosystem is a thriving sphere where a select group of telecom titans, including MTN, Airtel, Safaricom, among others stand as beacons of Africa’s economic and social evolution.  These telcos have provided connectivity to hundreds of millions of individuals long left in the dark by a lack of robust fixed broadband and fibre connectivity.

However, as Africa’s telecommunications sector embarks on a journey of diversification and expansion, an opportunity presents itself for emerging telcos to flourish and leave their mark on this dynamic landscape.

ROBERT van BREUKELEN, chief executive officer (CEO) of Itemate Solutions, a leading provider of digital solutions and software platforms, in an  interview with Business a.m.’s ONOME AMUGE, shared his expert insights on how emerging African telcos can grasp the opportunity to enhance their offerings and channel the spirit of innovation that drives their dominant counterparts. Excerpts:

Given the dominance of large telecoms players such as MTN, Airtel, amongst others in the African telecom sector, what opportunities and challenges do you think emerging telcos face when seeking to establish a foothold in the African market?

The African telco market has rapidly consolidated over the past decade with some telcos merging, large telcos acquiring smaller telcos and inefficient telcos disappearing. There do appear to be some interesting dynamics taking place with the likes of MTN pulling out of smaller markets (MTN Guinea Bissau and Guinea Conakry operations being sold to Telecel and Telecel having also acquired Vodafone Ghana) which enables “Tier 2” telcos to grow their footprint while the “Tier 1” telcos focus on their bigger markets and moves towards mobile financial services (banking, loans, remittance, insurance, Mobile Money).

We are also seeing governments assisting smaller telcos to upscale and grow their share in the market through preferential pricing and regulations. This could be due to governments having a stake in the telco or wanting to reduce the influence of the larger telcos in their countries. Some larger telcos are more focused on the corporate and higher end customers, thereby leaving an opportunity for emerging telcos to service the lower end of the market: mostly prepaid customers with feature phones. While there are opportunities for emerging telcos, they will face challenges entering markets particularly due to brand loyalty (many of the biggest brands in Africa are telcos) and infrastructure costs with bigger competitors rolling out 5G.

Do you think there is still space for more competition in the African telecoms industry, or is market consolidation likely to be the long-term trend?

There is space for more competition in certain markets. However, I believe the days of five or more telcos servicing a market of 20 million are gone. We have seen Ethiopia issue a licence to Safaricom, removing Ethiotel’s monopoly. Safaricom will face an uphill battle capturing a large portion of the market given the government’s stake in Ethiotel.

Consolidation is more likely to be that of telco groups with a regional focus rather than the land-grab we saw in the 1990s and early 2000s. Consolidation within countries will continue in some markets but these aren’t always successful such as is the Tigo/Airtel consolidation in Ghana.

How can smaller, emerging telcos leverage innovative solutions and technologies to carve out a niche in the African market, particularly for underserved communities?

A great initiative that we at Itemate are piloting with Mellowvans is providing telcos with an affordable and durable electric vehicle which is fitted with a tablet that runs the point of sale solution. The vehicle, with a range of over 130 kilometres, and featuring spacious and secure storage, provides the telco with a mobile store which can go to more remote areas rather than customers travelling to brick-and-mortar stores and queueing for hours.

What strategies can emerging telcos implement to improve their point-of-sale capabilities, both in terms of efficiency and customer experience? How can they leverage new technologies and analytics to provide a better in-store experience?

Telco stores/service centres have long queues where customers can sit for hours before being serviced by an agent. Traditionally, a telco agent can alternate between a dozen or more systems to service customers. This is inefficient and time-consuming.

A streamlined point of sale that provides a single interface for all types of sales and services that a customer might require can dramatically reduce the time required to service customers. This reduces queueing time, improves customer experience and enables more customers to be serviced in a day. Many point of sale solutions don’t cater to the specific needs of the telco industry and their customers. Itemate’s point of sale solution is built-in and is specifically created for the telco industry with robust integrations to other platforms (Mobile Money, CRM, Postpaid) provides many benefits.

This includes extensive Reporting capabilities and Dashboards that provide real-time sales and inventory data as modules providing the telco with the analytics and insights to drive more sales and efficiency.

What solutions can emerging telcos deploy to mitigate the risks associated with SIM recycling and ensure customer data is securely handled? How can they balance the need for profitability with the need to respect customer privacy and trust?

Many smaller telcos manage their numbers and the recycling thereof manually. This does increase the risk of numbers being recycled incorrectly resulting in customer dissatisfaction and reputational risk.

Also, as telcos offer a wider range of services, particularly mobile financial services, telcos need to be even more thorough in ensuring the accuracy of the number recycling. In the past when phones were used for basically calls and SMSs,  recycling a number incorrectly would result in a user not being able to make a call until it was resolved. Now, a user might not be able to access their Mobile Money until it is revolved. Not being able to access one’s money has a much bigger impact than not being able to make a call. Automating the number management and recycling using a system such as Itemate’s Number Management solution ensures 100 percent control and accuracy of numbers and recycling.

What steps can emerging telcos take to build and maintain strong, long-term relationships with their dealer networks?

Telcos rely heavily on their dealer networks to access a broader market while not having to be present in these areas. This is done through selling to dealers at a discounted rate and these dealers sell to customers from their stores or kiosks. However in many instances the telco has no view of their dealers activities after the dealer has left with their stock.

Providing dealers with a point of sale on a mobile phone which is integrated into the telcos systems not only provides the dealer with a business tool but also provides the telco with invaluable data as to the dealers’ sales behaviour (where and when they are selling) and

inventory levels. This enables the telco to manage their stock and have stock ready for the dealer when the dealer’s stock reaches a particular level. The telco is also able to share information and trends to the dealers which the dealer might not have access to.

Given the inherent logistical challenges associated with inventory management, how can emerging telcos in Africa minimise losses and streamline their operations to better compete with larger, more established players?

Inventory management is crucial to any business and telcos are no different. Telcos move large quantities of valuable physical (handsets and SIMs) and virtual (airtime and eSIM) products throughout the country. These are both serialised and non-serialised (quality

based). The telco needs to know where every item is at any time. Itemate’s inventory management/track and trace solution which is an extension of Itemate’s point of sale solution provides the telco with real-time inventory management of every inventory item from procurement to warehouses, stores, cashiers and the sale of the item. Full traceability ensures that there is someone accountable if the inventory goes missing from any location.

How can emerging telcos collaborate with their suppliers and logistics partners to ensure that inventory is securely moved around, and how should they handle instances of theft and fraud?

Any opportunity that again springs to mind is the use of the likes of Mellowvans to move inventory between warehouses and stores. Mellowvans’ secure storage, vehicle tracking and onboard digital recording is an ideal solution.