Telkom set to undergo transformation in wave of industry disruption

A section of Telkom shop at GPO, Nairobi. [David Njaaga, Standard]

The global wave of technological innovation in this Fourth Industrial Revolution portends major challenges and opportunities in the telecommunications landscape.Telcos have the opportunity to champion a more robust agenda in shaping discourse around artificial intelligence, Internet of Things, robotics and virtual reality.

We are witnessing a disruptive convergence of technologies with digitisation as their backbone. Even as this happens, Telcos have to reorganise and realign their broader business strategies in order to rejuvenate and seize opportunities that come with this disruption to remain relevant.

As Kenya rallies behind government’s commitment towards realising Vision 2030 and the Big Four agenda, digitisation of key aspects will be crucial. Manufacturing, for example, should be heavily reliant on artificial intelligence and robotics to increase efficiency so as to realise this. It therefore behooves Telcos to invest and provide digital solutions that will bolster the manufacturing processes to support the government.

In February this year, Telkom and Airtel announced their intention to combine Telkom’s Mobile, Enterprise and Carrier Services businesses with Airtel, to operate under a combined entity to be named Airtel-Telkom.

The entity will possess enhanced scale and efficiency, larger distribution network and strategic brand presence. This will enhance the range and quality of products and service offerings and provide greater choice and convenience to the consumer.

Airtel-Telkom will also see sustained investments in networks to further accelerate the roll out of future technologies. The Enterprise and Carrier Services businesses will get a boost with a larger fibre footprint and increased number of enterprise customers - including both large corporations and SMEs who would have access to a diverse portfolio of world-class solutions.

At a global level, the transaction in question is not unusual as the telecommunications and technology industry has witnessed mergers, acquisitions and rebrands over time, providing companies with opportunities to reinvent themselves to stay afloat and where possible, thrive.

Forces propelling the coming together of Telkom and Airtel also present interesting, perhaps fundamental challenges for regulatory frameworks. These range from our own domestic telecommunications market structure to the technological disruptions which Kenya, as is the case with other economies the world over, will have to keep up with.

A healthy regulatory environment is crucial for the growth of Kenya’s telecommunications industry, which is one of the only markets in the world with extreme incumbent industry concentration. This is the moment to move from the talk and act decisively on the dangers of a potential monopoly; a situation that could occur if the intended merger is not supported, forcing the country to witness the death of the two smaller players. 

In Europe, the regulatory environment continues to propel the growth of smaller players in that telecommunications space, leading to a healthy telecoms market. Belgium and Germany, for instance, lead this transformative journey, creating an operating space for smaller Telcos to thrive in their markets.

So, back home, in as much as constructive criticism and worthwhile scepticism are encouraged, we should de-politicise the process, and pray that regulatory actors holding the key to the realisation of the merger will appreciate that the merged entity will provide a more robust and alternative choice to the consumer, and, with regulatory relief, see to a thriving Telco market.

Combined entity

Despite operating in a tough environment, Telkom, as an entity, has succeeded in providing services to its consumers; adapting to technological advances and most importantly, seizing the opportunities that come with disruption in the digital space. The transfer of Telkom’s main telco business to the combined entity will allow Telkom to offer enhanced services and solutions to its customers. It will also be seeking to reshape its value proposition with renewed vigor, as it evolves into a fully-fledged technology outfit.

Technology controls virtually all sectors of the economy: Finance, Health, Agriculture, Manufacturing, Education and Trade. Therefore, Telkom’s relevance and contribution to the country’s GDP directly and indirectly cannot be overlooked in its renewed focus as a strong technology partner that will support the Government’s digitisation agenda through targeted solutions and management support.

Just picture it; Kenya’s Technology sector’s milestones qualify as case studies the world over, in future. It attracts further investment, both local and foreign.Telcos and technology companies get to focus on their core business; investing in research and development – launching new products and solutions to improve the overall customer experience. This however, will remain a utopic target, if we do not expedite the much-needed industry reforms.

Mr Kibati is the CEO of Telkom Kenya