Reliable telecommunications is one of the key criteria for international investors and the expanding of business in SA. At the heart of this, are the telecoms infrastructure or equipment providers who provide the backbone for these vital networks.
In SA over the past year, the telecommunications equipment market has continued to experience massive changes resulting in positive, solid growth, according to the latest research by BMI-TechKnowledge, a local IT and telecommunications research house.
According to the report, the SA telecoms equipment market is set to grow at just over 10% compound annual growth rate (CAGR), reaching peaks from 2002-2003 due to influence of huge events like the second network operator (SNO), Telkom`s Packet Mode Architecture, and Cell C and Sentech`s multimedia licence. The 2000 market was valued at R15.2 billion and will increase to R24.9 billion in 2005.
This positive growth has been despite the general worldwide turndown in the telecoms market and can be attributed to the advent of the SNO, Telkom`s initiation of PMA, the entry of a third cellular operator and the initiation of Universal Mobile Telecommunications Service (UMTS).
All these factors have significantly influenced the growth of the telecoms infrastructure market in SA and government is playing its role in this area as well.
Heinie Booysen, report co-author, says the government agenda aims to create infrastructure-based competition through the telecoms policy, which is good for both the market and vendors.
The cellular equipment market is forecast to still grow towards 2003 but experience a significant drop during 2003 to 2005. This drop won`t last all that long and the introduction of 3G/UMTS will again spurt cellular growth.
During the period 1998-1999 the data networking market experienced phenomenal growth of 47%, but has since experienced a sharp decline from 1999-2000 to -24%. This can be attributed to the negative sentiment in technology stocks and overspending in the networking arena in 1999.
Opportunities are abundant for the software platforms market as the IT, telecoms and networking start to play in the same space. Wireless access will be the choice of access for many companies and the SNO will spur this segment due to the fact that wireless access is seen as the quickest way to market.
The report highlights that the fixed-line market will grow at CAGR of 5% towards 2005. The year 2000 saw a marginal increase in this market from 1999 due to Telkom meeting 15 of its 16 licence agreements and is busy consolidating its expenditure by moving to an "order as required" basis. Booysen says Telkom is still the main customer for switching equipment followed by Eskom and Transtel.
"So while telecommunications infrastructure attracts business, business drives infrastructure in return, creating a self-fulfilling cycle that can only benefit SA," concludes Booysen.
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