14 April 2022.
While the global ICT industry is returning to its previous growth pattern of 5%-6% growth year over year, BMIT research shows that while the recovery is also happening in South Africa, it is occurring at differing rates within different sub-sectors, as a result of structural changes in the ICT market. This is one of the findings of BMIT’s latest ICT Market Overview and Sizing Report.
The uptick is happening despite customers facing their own challenges: a quarter of business customers surveyed by BMIT said that their own revenues were still down compared to 2019, revealing the lingering effect of the pandemic. However, around a third of mid-sized companies indicated some level of growth from pre-pandemic levels, illustrating the hit-and-miss impact of the pandemic – with some industries doing well and others (such as travel and hospitality) really struggling.
Because many business customers are still financially constrained, they are being forced to prioritise their budgets carefully. Spending on IT hardware, software and services rebounded significantly in 2021 from the dismal spending in 2020, with overall IT revenue growth at 6.5%. However, business telecoms spending declined overall.
Putting the IT and telecoms categories together, overall ICT revenue growth of 3.7% is, in fact, below the global average. The telecoms sub-sector saw revenue growth of only 1.2% in 2021, pulled down by declining voice markets and mixed growth in the mobile sector, i.e. strong growth in fixed-mobile broadband services but declining mobile voice and moderated mobile data revenue due to price pressure.
SA ICT Market Growth in 2020 and 2021 (BMIT)
Telecom companies reported significant cut-backs in business customer spending, whilst the residential broadband market was the notable exception last year, growing at a robust 17.5%, putting a number to what we already knew about how critical home internet is in a pandemic. This growth occurred in spite of the massive price/performance increases seen in both fixed and mobile broadband offerings in the market and within a highly competitive marketspace.
BMIT forecasts ongoing rollout of access fibre in both the home and business segments, i.e. an ongoing land-grab. FTTH rollout, and corresponding adoption, is now moving rapidly ‘down the pyramid’ to next-tier towns and customer affordability segments, while fixed-mobile broadband remains a very significant gap-closing solution.
Telkom’s end-of-life plans for its copper network gave rise to significant opportunities for various companies that supply both business and residential segments, as a large base of DSL connections needed to be migrated to fibre, fixed wireless and fixed mobile connections
The business market is undergoing a major shift, including the move to public cloud services. BMIT detected a significant increase in this respect across companies of all sizes, in its annual enterprise survey, which contributed to the forecasts included in the Report.
Other key IT drivers unpacked in the Report include: digital transformation, automation and e-commerce.
Digital Transformation has been embraced by, or thrust onto, organisations as they come to terms with operating in a physically restricted environment where remote working and hybrid workplaces are now the new normal.
The digitisation of back office functions and process optimisation is also taking centre stage. As far as automation is concerned, data driven decision making is yielding valuable business insights and Robotic Process Automation is a current iteration of this.
Due to the shift in mindset required to adapt to the new nature of business, organisations are now more receptive to evaluating and adopting emerging technologies where they can be proven to benefit operational cost reduction, improve customer service and retain competitiveness.
Digital business models and data protection legislation have highlighted the need for comprehensive, holistic IT security, within the ongoing proliferation of sophisticated bad actors. POPIA now has a material effect on organisations and data management, as the implications of non-compliance are significant.
What is evident from the projections in the Report is that whilst certain ICT business areas have shown muted growth, others have seen strong performance. In some cases the growth is a temporary correction, whilst in others, it is part of a new or sustained trend.
Get this report: SA ICT Market Overview Sizing and Forecast 2022
See BMIT’s full range of reports: BMIT Publications
References to this report in the media:
BusinessTech: Access to capital critical for growth in the ICT sector
ITWeb: SA’s IT spending on software, hardware rebounds
MyBroadband: South Africa’s IT industry bounces back — with some exceptions
TechCentral: Patchy recovery for South Africa’s ICT sector after pandemic
MyBroadband: South Africa’s networks had lower revenue growth than the IT sector last year