Tech advancement will bring growth for telecoms, digital services, and cyber security

23 July 2018 4 min. read

As the South African market develops in tandem with global trends, three primary market domains are set to take centre stage in the near future, namely cyber security, digital services, and telecommunications. According to Frost & Sullivan, the three fields will grow from their current cumulative value of around $15,000 to cross $20,000 by 2022.

Frost & Sullivan is a growth strategy and consulting firm – based in the US – that has market research and analysis deeply embedded in its service offerings. Leveraging these capabilities, the UK’s Foreign & Commonwealth Office (FCO) has commissioned the firm to study the digital markets in a number of developing economies, including South Africa.  

The highlights of the study reflect a number of key trends that are currently prevalent across the South African economy. In the telecom sector, for instance, revenues from voice call services are peaking, which means a number of players in the sector are looking to diversify to other service areas such as mobile commerce (mCommerce), cloud storage, and video-on-demand.

SA telecommunications market forecast 2017-2022

Service providers are also increasingly looking to develop their Internet of Things capabilities to enhance their service offerings beyond simple connectivity to incorporate IoT solutions. State-of-the-art technology is also being integrated into the financial sector as per the report, through the development of the FinTech arena

As per the report, 76.5 % of the South African population is now financially active, which means that they make use of banking and financial services in some form or the other. This presents a massive opportunity for FinTech developers in the country, who are currently working on developing mobile payment techniques.

Outside of the technological domain, the consulting firm finds that network providers are looking to captivate their respective markets by distributing a mix between what the report terms as “hyper-localised content” and international sports broadcasting of local favourites such as football and rugby.

Digital services market forecast 2017--2022 for consumers and firms

As an increasing portion of market services becomes digitalised, the threat from cyber attacks becomes more pertinent by the day. Therefore, a key pattern noted in the report is a tendency in the business world towards investing in cyber security systems, particularly in the digital services market.

Sector-specific growth

Based on these trends, the report identifies a number of key opportunities, which it categorises within the three broad domains (telecommunications, digital services, and cyber security).

In the telecoms sector, for instance, providers have the opportunity to capitalise on the large base of users in the country’s rural areas. Given the lack of electricity in some of these regions, the report recommends the development of hybrid models of mobile tower equipment to use alternative forms of power generation.

Cybersecurity market revenue forecast, 2016 - 2022

Another opportunity for service providers is the improvement of satellite connectivity to some remote areas that have a high concentration for the mining industry, which is one of the country’s most critical sectors. On the back of these opportunities, the report predicts growth of the telecom sector in South Africa from its 2017 value of $3.7 billion to  $4.3 billion by 2022.

For the digital services sector, the opportunities are multi-sectoral, essentially catering to any firm looking to diversify its business and product portfolio, especially with respect to the integration of IoT solutions. Leveraging these opportunities, the digital services market for consumers will surpass $4 billion by 2022, while that for businesses will surpass $6 billion over the same period.

Lastly, the report identifies huge potential in the cyber security domain, particularly for the Business and Financial Services, where data leaks and cyber attacks can be crippling. The telecom and manufacturing sectors are also looking to fortify themselves, which is expected to drive the cyber security market up to approximately $1.2 billion by 2022.