SA telecoms status quo ‘not sustainable’
Cell C CEO Alan Knott-Craig predicts a wave of consolidation is looming for SA's telecommunications sector as smaller industry players try to take on MTN and Vodacom more effectively. By Duncan McLeod.
The status quo in SA’s telecommunications industry is “not sustainable” and a wave of consolidation is coming soon.
That’s the view of Cell C CEO Alan Knott-Craig, who says he expects a big shake-up in the industry, possibly within the next six months, with smaller players reaching out to each other in an effort to build scale to take on industry giants MTN and Vodacom.
He says the changes will be driven by the need for smaller players — and he includes Telkom in the category — to build bulk so they have the scale to take on their bigger rivals. Though he’s reluctant to give much away, Knott-Craig hints that he has been engaged in discussions which could spur consolidation in the sector.
He says Telkom’s mobile arm, 8ta, is going to struggle to be successful. Although he believes 8ta has built a “very good, high-quality” network but with limited coverage, the investment needed is “busy drowning Telkom”.
“We can all see the numbers Telkom published. It’s not sustainable the way it’s going right now,” he says.
“Cell C, 8ta, Neotel and Telkom are four small players in the market — I separate 8ta and Telkom because I can — and they need scale,” Knott-Craig says. “Who merges with whom? I don’t know. I think that will pan out as it pans out, but I think we will see results on that front in six months.”
Knott-Craig believes it would make sense for smaller industry players to get together to build a more powerful retail telecoms business. “There’s no time to do this organically anymore,” he says. “Everyone recognises the status quo is not sustainable.” — (c) 2012 NewsCentral Media