Conclusion

AI-driven use cases are being used in Africa today and will grow significantly over time. However, overall spending on AI-driven use cases in Africa will be less than in other markets, because of slower adoption of NFV, SDN, and 5G. Most of the spending in Africa throughout the forecast period will concentrate on networks that are pre-NFV, SDN, and 5G, and on use cases that are not driven by highly automated network operations.

The most significant investments in AI-driven use cases in Africa today are in customer service and marketing VDAs. Spending in this category will remain strong throughout the forecast period.

The largest investment in AI over the forecast period in Africa, nearly 70% of all spending, will be in network operations and management. More than 91% of the spending for this use case will occur between 2022 and the end of 2025.

The telecom industry’s current high fixed costs and retail price pressure are squeezing operator profit margins to the point that cost control in the form of automation is being rapidly adopted. This is driving significant innovation and investment in AI solutions. However, for Africa, AI solutions are less of an urgent need because of the region’s lower operating costs (labor), relative to other markets.

It is difficult to see how telecom operators can deliver next-generation 5G services without a significant amount of network automation. AI-driven solutions will contribute significantly to the 5G business case from the beginning and their contribution to network automation will grow over time. This will be true in Africa, as in all regions.

In comparison to other AI opportunities, the innovation and investment in AI solutions is concentrated in a relatively small number of vendors, and an even smaller number of startups. Omdia believes the barriers to entry are too high for potential disruptive innovators. Omdia believes that Ericsson, Nokia, and Huawei have no choice but to evolve their businesses to become AI-centric. None of these companies will survive otherwise, because of the scale that is needed to manage the next level of telecom networks. And as much as the media portrays telecom operators as tired of their legacy vendors, the fact of the matter is these networks are highly specialized and the most complex in the world. It is not a space that is ripe for startups or any other company, for that matter, to disrupt. The fact is that telecom operators will strive to build as many components of their business on their own, but they will also depend heavily on legacy network vendors to innovate and invest in research and development (R&D) to develop new solutions.