Johan van Huyssteen
While innovation and partnerships feature as top priorities for global communications companies, South Africa's companies look towards increasing their share in existing markets and expanding their geographical footprint, particularly into the rest of Africa, as a growth strategy.
A survey undertaken by professional services firm PwC found that 30% of South Africa-based communications CEOs saw growth opportunities emerging from an increased share in existing markets, with 30% believing entry into new geographic markets was a big opportunity for business growth.
PwC communications leader for Southern Africa Johan van Huyssteen said 94% of South Africa’s CEOs indicated ambitions or plans to enter or expand in Africa, with indications that Nigeria was a firm favourite.
The seventeenth Annual Global CEO Survey found that nearly half of the global communications CEOs pointed to African countries as holding the most important prospects for growth over the next 12 months, with 29% naming China and 23% the US.
“Africa is still considered one of the world’s most dynamic telecommunications markets and is also one of the most innovative. Many international telecommunications firms are looking for opportunities in Africa that will provide new revenue streams,” says Van Huyssteen.
But, the US, Mexico, Indonesia, the Philippines, Singapore, Turkey and the UK were singled out by global communications CEOs as the best prospects for growth – outside of the Brazil, Russia, India, China and South Africa economic bloc – over the next three to five years.
Only 1.4% of the CEOs surveyed indicated South Africa as a top growth destination.
Forty-one per cent of the world’s CEOs also believed growth prospects would emerge from products and service innovation compared with 24% of South African communications companies.
Globally, only 18% of the communications CEOs surveyed targeted increased shares in their existing market, with another 15% eyeing new geographic markets for growth.
Another 26% believed that mergers and acquisitions and new joint ventures and strategic alliances were the routes to go.
“[Global] communications CEOs are looking to product and service innovation to drive their companies forward. Most CEOs want to improve their company’s ability to innovate and they’re looking to strategic alliances or joint ventures (JVs) to propel growth,” explained PwC global communications leader Pierre-Alain Sur.
“CEOs are well aware of the importance of collaboration, particularly as many look to restructuring. Partnerships feature prominently in their plans,” he added.
More than half of communications CEOs indicated that they were looking into a new strategic alliance or JV, while 44% of global respondents intended entering a new JV or alliance within the next 12 months.
Further, there was an uptick in the number of CEOs confident of revenue growth over the next year, with 72% of communications CEOs worldwide ‘somewhat’ or ‘very’ confident of revenue growth and 80% of South African CEOs ‘somewhat’ or ‘very’ confident.
“A staggering 90% [of global communications CEOs] are ‘somewhat’ or ‘very’ confident about their company’s prospects for growth over the next three years,” Van Huyssteen pointed out, noting that 87% of South Africa’s CEOs were confident of growth prospects by 2017.
PwC interviewed 39 communications CEOs in 25 countries, as well as a further 105 interviews with CEOs from South Africa during the fourth quarter of 2013.