War is on for lo­cal fi­bre mar­ket

CityPress - - Business - JUSTIN BROWN justin.brown@city­press.co.za

The battle for supremacy in the multibil­lion-rand lo­cal fi­bre-to-the-home mar­ket is just be­gin­ning, with es­tab­lished telecom­mu­ni­ca­tions play­ers and a num­ber of in­de­pen­dents all vy­ing for their share.

Vu­ma­tel CEO Niel Schoeman said he ex­pected that, over the next two to three years, about R10 bil­lion was likely to be spent on fi­bre-to-the-home in­stal­la­tions, in­clud­ing R3 bil­lion by Vu­ma­tel it­self.

The com­pany has al­ready spent be­tween R300 mil­lion and R400 mil­lion since June 2014 on de­vel­op­ing fi­bre in­fra­struc­ture in Jo­han­nes­burg.

The first neigh­bour­hood where Vu­ma­tel in­stalled its fi­bre broad­band con­nec­tiv­ity was in the sub­urb of Parkhurst, whose res­i­dents were “fed up with slow speed”.

Since then, the com­pany had in­creased the sub­urbs where it had in­stalled Vu­ma­tel fi­bre to 30 in Jo­han­nes­burg, cov­er­ing about 33 000 house­holds, Schoeman added. Such neigh­bour­hoods are called “fi­bre­hoods”.

The com­pany is also plan­ning to open up in Cape Town. Sub­urbs iden­ti­fied in­clude New­lands, Sea Point and Vre­de­hoek.

At any time, Vu­ma­tel em­ploys 4 000 per­ma­nent staff and con­trac­tors.

The big­gest driver of growth in fi­bre-to-the-home has been the growth in pop­u­lar­ity of high-def­i­ni­tion and ul­tra­high def­i­ni­tion video de­liv­ered over the in­ter­net, as pro­vided by Netflix and Show­max.

The in­stal­la­tion of fi­bre will ul­ti­mately re­place cop­per.

Schoeman said that about 95% of the in­ter­net in South Africa was cur­rently de­liv­ered by cop­per lines and 5% by fi­bre lines, but the lat­ter was set to grow.

Vu­ma­tel’s key com­peti­tors are Telkom, Fi­bre­hoods and Metrofi­bre Net­worx, in which bil­lion­aire busi­ness­man Pa­trice Mot­sepe’s African Rain­bow Cap­i­tal and San­lam Pri­vate Eq­uity have stakes.

Fi­bre­hoods de­clined to an­swer ques­tions re­gard­ing its fi­bre-to-the-home plans. Metrofi­bre Net­worx did not re­spond to ques­tions from City Press.

MTN and Vo­da­com are also eye­ing the high-speed, open-ac­cess in­ter­net con­nec­tiv­ity space.

MTN has de­clared its in­ten­tions of tak­ing a lead­ing po­si­tion in the lo­cal busi­ness and house­hold fi­bre mar­ket.

Vo­da­com has noted fi­bre as a new rev­enue op­por­tu­nity. The com­pany has so far passed 25 725 homes and busi­nesses, as well as 190 es­tates, for its fi­bre-to-the-home projects in the pipe­line.

Telkom has in­ten­si­fied its roll-out of fi­bre, hav­ing iden­ti­fied this form of net­work coverage as a key in­vest­ment area.

Telkom CEO Sipho Maseko said this week that fi­bre had long-term growth po­ten­tial as on­line video be­came more im­por­tant.

In the year to March, Telkom spent R757 mil­lion on in­stalling fi­bre-to-the-home – up 200% from R252 mil­lion for the pre­vi­ous year.

This fi­nan­cial year, Telkom is plan­ning to triple its fi­bre spend to al­most R2.3 bil­lion to ex­pe­dite this type of net­work coverage.

The com­pany has passed 81 503 homes for fi­breto-the-home, and more than 850 gated com­mu­ni­ties have been cov­ered with fi­bre. By 2018, Telkom aims to pass 1 mil­lion homes with fi­bre.

Re­gard­ing fu­ture growth, Schoeman is ex­pect­ing con­sol­i­da­tion to hap­pen in the fi­bre sec­tor, and Vu­ma­tel would like to be the preda­tor rather than the prey when that con­sol­i­da­tion hap­pens.

Vu­ma­tel is Schoeman’s third busi­ness af­ter he co-founded the Birch­man Group in 2003 in the UK, fol­lowed by a fi­bre-to-the-busi­ness com­pany, which was sold to Dark Fi­bre Africa two years ago.

The share­hold­ers of Vu­ma­tel are Schoeman, Jo­han Pre­to­rius, Richard Came and In­vestec.

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