Capital Expenditure in South Africa: Bucking the world trend in telecommunications

CAPEX has taken a nosedive on a global stage recently, due to uncertainty in economies from the US across the pond to the UK.

There have been multiple influences that have helped to create this result, with the Tax Cuts and Jobs Act being instituted in the US, trade uncertainties, Brexit, the US-China trade war, and more.

“Global corporate CAPEX grew a mere 2% last year, and we expect a similarly feeble 3% expansion in 2019. This is thin gruel after years of stimulus and means CAPEX will not offer much help in sustaining the current economic cycle.”

Gareth Williams, senior director of global research at Standard & Poor’s

In South Africa, we find ourselves in a strange position compared to the global markets, with our business sector sometimes making excessive CAPEX investments due to the growth in Telecommunications, Agriculture, Mining, Technology, Tourism, and Real Estate – all with high growth, high profitability, and low consolidation.

Recently, South African companies Vodacom and Telkom have been in the news specifically because their CAPEX has risen significantly.

From TechCentral.com, we gather that both telecoms giants have been under pressure to expand their infrastructure to accommodate burgeoning customer numbers.

Vodacom’s capital expenditure is dedicated to the improvement of their network to continue their drive to service delivery and growth within the mobile market:

Vodacom spent almost R4.8-billion on expanding and improving its network in South Africa in the six months to 30 September 2018, an 18.2% jump from the same period a year ago.

https://techcentral.co.za/vodacom-south-africa-CAPEX-jumps-18/93949/

Telkom looks to improve their service delivery to remain competitive in the mobile network arena:

Telkom’s spending on its mobile network has skyrocketed — with capital expenditure well above guidance — as it invests big money to ensure its network can keep pace with rapidly growing demand for its mobile services. https://techcentral.co.za/telkom-CAPEX-skyrockets-as-mobile-base-jumps-75/93955/

South Africa, luckily, has an economic growth potential that allows us to continue to invest in goods and services against the global trend – but ensuring that we do this responsibly and in-line with our capabilities, current data, and market forecasts is absolutely critical.

Ensuring that your business keeps its nose ahead of its competitors in this highly competitive market while also being frugal, well-guided, and fiscally responsible, is a challenge. Planning for growth while covering your bases for the “just in case” is a common requirement in South African business.

Here’s how an embedded CAPEX solution can help you achieve this:

Forecast Accurately:

• Integrate with your ERP
• Incorporate your actual spend on purchases or projects
• Commence forecasting on a project-based schedule
• Cater for unforeseen capital expenditure

Budget Appropriately:

• Simplify budget requests with a one-page e-form.
• Make, review, and approve requests with ease
• Define your own organisational workflow
• Simply exclude or include budgeted projects in your budget submission

Cortell Provides you with an IBM solution which provides you with tools that accommodate any type of Capital Expenditure, and allow you to plan, budget, forecast, and analyse your Capital Expenditure in ways that give you better insights into the current markets vs. rolling trend.