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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Snowshoe who wrote (53265)	8/7/2009 4:07:08 PM
From: elmatador	Respond to of 217906

Grow baby grow Why our big banks are turning Chinese. moneyweb.co.za .... Consider cellphone companies. The South African cellular market grew very rapidly in the early years of mobile telephony, sending MTN and Vodacom into orbit. Today, however, there are 50m SIM cards in the country, more than one for every man, woman and child. Clearly, a growth ceiling for cellphone companies has been reached in the local market. The companies have tried to grow by selling different products, adding 3G capacity, cellphone accessories and new services like photo messaging to their offerings, but that strategy can provide them with single-digit growth at best. The smart folks at MTN realised a few years ago that this was going to be a problem. Once every South African had a smart phone and a data and voice contract, all MTN could hope to do would be to maintain its market share; and the market was becoming more competitive, with the entrance of companies like Cell C, Virgin Mobile, Nashua Mobile and so on. So MTN made a decision to enter other markets; it took its South African experience and started developing cell networks in emerging markets like Nigeria, Iran, Uganda, Afghanistan and a dozen others. In those markets, in which cell penetration was much lower than in South Africa, MTN quickly managed to find the rapid growth its investors wanted. Contrast that to Vodacom. As part of the Telkom group until very recently, Vodacom remained very much a South African-focused business. Once Vodacom was listed, it quickly became apparent that the market preferred MTN's aggressive growth plans to Vodacom's more modest ambitions. A similar thing is happening in the banking industry. Admittedly, the South African market is not saturated when it comes to banking products. Plenty of South Africans have no bank accounts, let alone the added services like home and vehicle loans, credit cards, savings products and so on. However, given our socio-economic structure, most of the South Africans who the banks can profitably serve are being served, so real, profitable growth is going to have to come from elsewhere. Standard Bank, like MTN, realised this some years ago, and took the decision to move into other, less crowded emerging markets. In 2008, Standard Bank's African (excluding South Africa) operations contributed 13% to headline earnings, up from 9% in 2007, and growth in those operations has been double-digit since their inception, vindicating Standard Bank's decision, and inspiring competitors to do the same. The truth is that most South African companies that have become successful, enduring businesses have taken the decision to step outside our borders. SABMiller, Anglo American and its subsidiaries, Richemont, MTN, Standard Bank - all of these companies have recognised the limits of the local market and ventured into the wide world in search of growth, and many more are trying to follow in their footsteps. Write to Felicity Duncan: felicity@moneyweb.co.za or follow her on Twitter at twitter.com