AI automation a potential route of entry to the telecoms sector

Artificial intelligence (AI) will make it easier for mobile virtual network operators (MVNOs) to gain a foothold in the telecommunications market, says Daniele Pe, an associate partner at advisory and investment firm Delta Partners.

Thanks to AI-enabled automation, setting up an MVNO can be done at “a fraction of the cost it used to take — a few million dollars”, San Franciscobased Pe told Business Day.

It was now possible to establish an MVNO within “a few months”, she said.

Through the information and communications technology (ICT) policy white paper, the South African government is trying to encourage competition in telecommunications by lowering barriers to entry.

MVNOs, including FNB Connect, Virgin Mobile and MRP Mobile, have a market share of about 1.7%.

“AI at this moment is probably the technology with the biggest potential to disrupt the telecoms industry,” Pe said.

Mobile operators could use the technology to automate customer interactions — including sales and support functions — and to personalise product suggestions and optimise pricing and promotions.

AI could also allow mobile operators to monitor and predict customer satisfaction; automate inventory management; screen résumés and provide hiring recommendations; and improve working capital management.

“Such automation would make operators much more efficient, agile and cost effective, radically transforming the way the organisation works,” Pe said.

FNB Connect’s chief commercial officer, Shadrack Palmer, told Business Day in March that the regulatory environment remained “challenging” for MVNOs and that the ICT policy white paper “has not gone far enough”.

“It’s proposing that it’s compulsory for networks to have three to five MVNOs on their network, but it’s not adequately addressing the challenges of what the wholesale rate or pricing will be from those networks,” Palmer said.

Meanwhile, Pe said mobile operators could keep abreast of innovation by setting up venture capital arms.

“By investing in innovative start-ups, they can accelerate innovation — something [that many of them] are failing at doing in-house.”

Telecommunications companies could also make direct investments in innovative firms, pursue joint ventures with startups or make indirect investments through funds.

Acquisitions were a less attractive option as takeovers could stifle innovation at the target company.

While mobile operators had lagged behind companies in other industries in establishing venture capital arms, “nowadays a good portion of them — I would say about a third — have made inroads in the start-up investments space in one form or another”.

In Africa, MTN, Orange, Millicom, Safaricom and Vodacom have invested in technology start-ups to spur innovation and growth beyond their core businesses.

AI AT THIS MOMENT IS PROBABLY THE TECHNOLOGY WITH THE BIGGEST POTENTIAL TO DISRUPT TELECOMS