Financial sustainability model for the South African telecommunication industry

Abstract

There is limited research on the intricate dynamics inherent in the telecommunications industry that affect the financial sustainability of mobile operators in many countries including South Africa. This study aimed to explore the factors that influence the financial sustainability of South African mobile operators. The study used purposive sampling to identify executives in mobile telecommunication companies who participated in this study. Qualitative data were collected through interviews while secondary quantitative data came from selected financial data from 2016 to 2020 to analyse the financial sustainability of the selected mobile operators in South Africa over time. Thematic analysis and financial ratios were used to analyse the data. Six themes identified to depict the financial sustainability of the South African mobile telco industry focusing on Vodacom, MTN, and Cell C were: clarity of mission to government as a key stakeholder, strategic flexibility in turbulent times, strategic innovation and growth in an adjacent market, investment in network infrastructure for quality and spectrum, managing ambidexterity and dealing with the risk of bypass. Furthermore, the study revealed that market complexity and dynamics putting pressure on financial sustainability; re-enforcing collaboration for resilience, the pressure of building individual and organisational capacity for the future and dealing with the difficulties of spectrum scarcity and its consequences were key in evaluating the impact of the competitive environment on the financial sustainability. The results show that there was the influence of regulation on financial performance evident through spectrum allocation, price control, and collaboration with stakeholders. In response to the COVID-19 pandemic on the financial sustainability of the telco industry mobile operators accelerated digitisation, increased data revenue, exploited market opportunities for data revenue growth, changed operating strategy, and injected a sense of urgency. Given the above results on financial sustainability, the study has proposed a financial sustainability model for telco mobile operators. This study contributes to the existing body of knowledge on financial sustainability by proposing a framework of financial sustainability relevant and useful to executives to assess and enhance the financial sustainability of their telco organisations to achieve competitive advantage in a volatile, uncertain, and complex environment. The results of this study are limited to the cases or sampled mobile operators, and the research only focused on the South African telco industry. Future research is recommended to empirically test the proposed model and validate the financial sustainability of the telco industry in contexts outside South Africa and other industries.