Page 86 - Risk Report 2024

1. Functional State 2. Politics

Governance and service delivery failures, such as inefficient, Complex and evolving regulations (with a related compliance
unreliable infrastructure, security, energy, and transportation, burden) and slow national policy response to spectrum
increase communication services failures, maintenance costs, requirements lead to delayed development of advanced
and key asset security cost, compelling the sector to partner services to meet market demand. Coalition politics may cause
with private security and industry players. The sector depends policy volatility, adoption of populist policies (e.g., free data),
on a functional State to facilitate deployment of infrastructure and increased regulatory intrusion, affecting the viability of
and access facilities that enable growth (e.g. wayleave and sector business models. Internationally, hostile geopolitics
tower site approvals require predictable processes and significantly affect crucial equipment sourcing, and partnerships
timeframes to inform investment decisions). Dysfunctional to advance network infrastructure and technology. Western
State processes cause delayed applications, corrupt processes, powers increasingly deploy economic policy, sanctions, and
and unreasonable cost demands. Ineffective security, safety, trade barriers, which have impacted semiconductor supply and
and law enforcement cause large scale theft and vandalism could restrict SA companies from sourcing from certain vendors
of infrastructure, whilst State governance failures lead to or countries (e.g. Huawei or China). West vs East technological
inefficient spectrum allocation, unfair competition, inadequate rivalry will continue to intensify, which may cause more
regulation, limited access for many, entrenching the digital aggressive restrictions with wider global trade implications,
divide. The net result is that SA is less competitive due to disrupting global supply chains. Geopolitical conflicts could
lower technology adoption and internet usage penetration. escalate regionally with economic impacts that will disrupt ICT
In response, communications companies globally adopt operations and increase costs. Supplier diversification will be
delayering strategies, where each delayered entity (e.g. fibre key to ensure business resilience and minimise dependence on
or tower providers) develops the specialisation to manage its a few high-risk suppliers.
business, stakeholders, and risks.

3. Economy 4. Social Security
Volatile economic conditions such as low GDP growth, sovereign Adverse socio-economic conditions caused by service delivery
debt, increasing inflation, high interest rates, forex fluctuations, failures and unemployment lead to increased social unrest,
Rand devaluation, result in weakening consumer and enterprise infrastructure damage, and business interruptions. Community
spending power. The resultant revenue pressures on sector unrest impairs access to sites for repairs and maintenance,
entities (as consumers choose between essential and non- affecting customer experience, exacerbated by equipment
essential services) diminishes the sector’s infrastructure theft and vandalism. The sector heightened its focus on social
investment ability. Governments in fiscal crises may resort to development to improve social security and reduce inequality.
increased taxation and regulatory enforcement with high fines The sector increasingly solicits community support to protect
on mobile operators. With sector entities strengthening their communications infrastructure.
balance sheets, increasing financial resilience, and hedging
forex exposures, whilst applying risk-based capital allocation,
the high costs of business will be passed on to consumers.
The sector responds by aggressively developing high-value-
affordable services and implements cost-savings strategies.

5. Rule of Law 6. Water
Increasing theft, vandalism, and fraud erode public confidence Water shortages affect fire suppression and cooling systems,
in the sector and discourage investment. Fraud primarily as well as network maintenance to keep data and switch
manifests in identity theft, phishing scams, and subscription centres equipment working optimally, apart from usual water
fraud (one of the highest contributors to revenue losses), while requirements for employees in workplaces. Water interruptions
theft of batteries and diesel particularly affect base stations. that could cause equipment damage and service interruptions
Sophisticated syndicates execute cell phone robberies at are mitigated through rainwater harvesting and backup tanks
stores, warehouses, or enroute during last-mile delivery, at offices and data/switch centres, or alternative air-cooling
requiring increased cost and effort to mitigate. Subscription systems, while water efficiency plans are incorporated into ESG
fraud is one of the highest contributors to revenue losses for strategies.
the sector, requiring costly risk transfer (insurance). Social
unrest mainly leads to vandalism at retail channels. The sector
increasingly collaborates with the SAPS and other sectoral
bodies (i.e. ESCI, SAFPS, SABRIC, COMRiC) to share intelligence,
increase risk awareness, and combat criminality. Local
‘business forums’ present an increasing challenge to roll out
and maintain tower infrastructure, either preventing new tower
or fibre installations or denying access to tower sites. These
all result in service interruption, reduced network reliability,
increased replacement/repair costs, high security costs and
poor customer satisfaction.