Battle for the cloud

Cloud is modernising and streamlining the way in which repeatable solutions and services are delivered to clients. South African telcos operating in Africa are catching on and big industry players are marching to the virtual battleground in an effort to diversify revenues streams. By Gugu Lourie

 Telkom’s acquisition of technology firm Business Connexion (BCX), a big move towards cloud services, will help the parastatal address the information technology and communication (ICT) needs of local businesses. It also provides Telkom with a ready-baked Africa strategy, covering more than seven African countries.

Global online retailer Amazon has joined the fray, announcing in August that it would set up an office in Johannesburg for its cloud computing business – Amazon Web Services (AWS) South Africa – with plans to hire as many as 250 people in the country.

Alpheus Mangale, chief business enterprise officer at MTN SA
Alpheus Mangale, chief business enterprise officer at MTN SA

At the same time, Vodacom is quietly expanding its enterprise business – which offers various services such as cloud across Africa – eyeing opportunistic growth in Nigeria, Morocco and Zambia.

All large operators in SA, as well as smaller operators Internet Solutions and Vox Telecom, are trying to position themselves as cloud players, says Dobek Pater, MD of Africa Analysis, which specialises in the analysis of telecoms in emerging markets.

But which of the local telcos is best positioned in the space for cloud services?

Some analysts seem to think Vodacom.

However, Telkom and BCX might rattle the cage, warns Farai Mapfinya, portfolio manager and head of equities at JM Busha Asset Managers.

“BCX has been in the cloud space for a while and owns one of the data centres in Midrand, which has a Tier IV certification; we think Telkom is likely to pose a greater threat going forward,” says Mapfinya.

Charles Lalieu, managing executive for cloud strategy at BCX, explains: “What sets us apart is that we seamlessly help [clients] transition to the cloud of [their] choice on [their] terms.”

Charles Lalieu, managing executive for cloud strategy at BCX
Charles Lalieu, managing executive for cloud strategy at BCX

Lalieu adds: “Notwithstanding this, BCX has the only two commercial Tier IV carrier-neutral data centres on the continent, which means we are probably best positioned to make use of and sell cloud services locally, or integrate into independent software vendor or customers’ data centres; we’ve already been doing this for some of our enterprise customers.

“As we move to a more automated offering it definitely creates a new way of providing IT services. Is this a new battleground? Possibly,” says Lalieu.

“The consumption of these solutions relies on IT services and consulting […] which are all traditional, just evolving to meet the new business models.”

Mapfinya agrees that declining revenues in the traditional lines for the telcos make cloud and data the next battleground.

But MTN Business says it is not gearing itself for a battle in the cloud space.

“Our purpose is not to fight for revenue, but to enable and inspire growth of our customers. What we have built is key to driving down our customers’ ICT costs, ensuring that they are flexible and can take their services to market quickly, making them more competitive,” says Alpheus Mangale, chief business enterprise officer at MTN SA.

He believes MTN is well-positioned in the data space due to its global multiprotocol label switching (MPLS) mechanism that connects customers to over 23 points of presence.

“We are in the unique position of having experience and expertise gleaned from operating across diverse markets.”

Vodacom Business chief officer Vuyani Jarana
Vodacom Business chief officer Vuyani Jarana

Vodacom Business, which has a global MPLS that has points of presence in 27 countries, argues that developing cloud-based service capabilities is not only about additional revenue streams but “is also about remaining relevant in a fast digitising African economy.”

Vodacom and MTN have been investing in their MPLS, which provides flexibility to transport and routes various types of traffic efficiently and quickly.

This will likely help operators, as lack of fibre networks may be a barrier for the full deployment of cloud services.

“Telcos are particularly well-positioned to succeed in the market for cloud services given their network capability,” says Vuyani Jarana, Vodacom Business chief officer.

Vodacom invests more than R8bn annually in its network infrastructure, says Jarana, but he believes that telcos will need to collaborate and create alliances to address Africa’s cloud services needs.




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