SANDTON, South Africa-The trunking industry in South Africa is in the throes of mergers, amalgamations and new acquisitions, which will change the nature of the industry. Experts believe there will eventually be only one national trunking operator catering to a specific niche market-business users-and operating side by side with the GSM cellular networks.
South Africa pioneered launching trunking in Africa, but as the launch concurred with that of GSM, trunking always lagged behind its successful sister.
Three operators, Fleetcall, Q-Trunk and One-2-One, were awarded trunking licenses for systems based on the MPT 1327 analog technology standard six years ago. The market has grown steadily but slowly, and with a market potential of 35,000 users, it remains a relatively small industry with about 18,000 total users in South Africa.
All three operators have or are about to experience considerable revamping. Fleetcall is merging with a telecom investment company called Sempress International Technology Holdings and will be listed on the Johannesburg Stock Exchange in July. Fleetcall will shift its focus to providing turnkey services in the telemanagement business, as well as offering value-added trunking services. It is the only network with national coverage, and with the additional financial boost it is about to receive, its prospects are promising.
The future of Q-Trunk still hangs in the balance. The national operator is 100-percent owned by the parastatal fixed-line operator Telkom. In October 1999, in a move to focus on Telkom’s core business, it placed Q-Trunk for sale through an open tender process. Sizwe Nxasana, Telkom’s CEO, said at the time: “For Telkom, it makes business sense to channel all its resources into its massive, fixed-line rollout and modernization program, which will contribute to the development and competitiveness of S.A. as a whole.”
The tendering process was stalled, and the future of the company is still uncertain, even though industry members believe it could be sold later in the year.
One-2-One experienced a reshuffle in March, with its shares taken over by Viking Ltd., a South African venture capital company. As part of the company’s restructuring process, shareholders of One-2-One sold their shares to Web Telecom, owned by a group of local investors, in February. Its plans are still undefined and uncertain. The network currently covers only two provinces in South Africa-Natal and Gauteng-but could expand in the future.
Trunking’s advantages
The revamped MPT trunking operators will have to decide whether they prefer to stay analog or follow the international trend of digital technology. Industry
experts have criticized the existing trunking systems in South Africa for using only analog technology, some with partly digital segments. They believe these networks cannot provide the same features, consistent high data, high-quality speech and fast call setups, as more modern, fully digital technologies.
But analog is likely to stay for some time. “For the near foreseeable future, analog will still remain the standard used by the trunking operators as digital technologies such as TETRA (Terrestrial Trunked Radio) will be not be ready for consumer use for another few years,” says Anton Joubert, marketing manager for Fleetcall. “It can provide a solution for emergency service networks, but it is not quite ripe for the South African consumer market. We will expand on existing, more robust analog technologies. We are, for example, pioneering data applications of the original MPT designed for voice only.
“There are certain distinct advantages offered by the MPT protocol, which are not available on the GSM networks-for example, instant messaging, where the shorter messages are acknowledged by the called party in real time.”
Then there is the question of price. The average MPT voice service is available for 250 South African rand (US$36) a month compared with some of the GSM packages at about 500 rand (US$71).
“Once the mergers and consolidation of the trunking operators have been completed, the operators are hoping to spill into the neighboring countries, but at a slower pace than in South Africa, as certain countries are still plagued by political uncertainties and state-controlled telecommunications,” said Joubert.
“Once these hurdles are overcome, we will be ready to move beyond our borders. What will open the market for us is the fact that the monopolies are realizing that radio trunking addresses a specific market segment for professional mobile radio users and does not compete with the mass consumer market, which uses GSM technology. The biggest enabler in Africa will be where countries allow network operators to bring in the necessary capital to develop and operate the network.”
To attract more subscribers on its network, the newly merged operator will introduce new value-added services. Fleetcall’s 55 service providers scattered all over the country, are already offering data applications for fleet management systems and vehicle tracking, while on the security side, they offer asset protection of fixed installations with telemetry technology. The operator is also planning to venture into prepaid applications for the taxi industry.
“For the long-haul operator in Africa, trunking is still the cheapest, most viable solution,” said Joubert.
