The R27-billion planned investment by operators and vendors to expand fourth-generation (4G) and fifth-generation (5G) networks in South Africa is a “step in the right direction” for the country’s economic growth.

Announced by Communications and Digital Technologies Minister Stella Ndabeni-Abrahams during her budget vote on May 18, the extra investment could provide the telecommunications sector a much-needed boost.

However, it will also be beneficial for the long term growth prospects of the entire South African economy.

“We agree with the Minister that this money will go a long way to expanding our communications network and help reach under-served areas and rural communities, and that this would help create jobs. The potential benefit goes much further than that though,” said global consultancy firm Kearney principal Dan Graham.

“Although the South African market for telecom services, such as fixed and mobile connectivity and pay television, is fairly saturated and spend is at the level of comparable countries, there is major room for growth in digital services such as online gaming, over-the-top (OTT) video and music streaming,” he explained.

Recent research by Kearney into the state of the connected consumer market in South Africa identifies clear opportunities for growth and expansion which could be boosted by the R27-billion in planned investments.

“In the media and entertainment section of the study, we found South Africans’ average spend on media and entertainment can increase by as much as 23%. Despite the comparable low spend, South Africa has a relatively high penetration of OTT video, online gaming and music streaming compared with the rest of the world,” Graham continued.

“All-in-all, telcos have a wealth of opportunities to bring more value to South Africa’s connected consumers and expand the market for digital services, providing opportunities to drive growth for telco and OTT services along with significant growth in the emerging connected devices space.”

“The effects of the [Covid-19] pandemic mean that consumers are relying on in-home connectivity and online entertainment and education, now more than ever before. It has also underscored the need for fast and reliable connectivity, capable devices and compelling services. If the telcos sector can grow and be successful, it will have positive knock-on effects for other parts of our economy.”