Rivals spend big to ramp up the fibre in SA’s telecoms diet
Telkom heeds call to action as plans for next-generation broadband are rolled out
THE South African economy may be teetering on the brink of a recession, but that isn’t keeping the country’s telecommunications operators from ramping up their capital spending. Telkom, Vodacom, MTN and Cell C, along with a host of smaller players, are all gearing up to make huge investments in fixed and mobile broadband.
In fixed lines in particular, a race has begun that could eventually result in a large part of Telkom’s legacy copper network being replaced with super-fast and future-proof fibre-optic broadband.
In mobile, meanwhile, the operators are positioning themselves to build national nextgeneration LTE broadband networks as the government finally — after years of delays — readies a policy on how radio frequency spectrum in two key bands will be allocated.
Barely a day goes by now without the CEO of one of the operators promising huge capital investments to bring developedworld-level broadband to South African consumers.
Earlier this week, it was the turn of Telkom CEO Sipho Maseko, who used the company’s annual Satnac conference to declare that the operator will not sit idly by and watch its market share in fixed lines being taken away by its many rivals.
Telkom, he said, would roll out fibre broadband past (although not into) a million homes by March 2018, from just 40 000 now.
That will entail a doubling of Telkom’s previously planned investment in fibre-to-the-home infrastructure, but, he said, Telkom’s wholesale division, led by company veteran Alphonzo Samuels, has the wherewithal to get the job done — and on time.
But Maseko’s competitors are not standing still. Vodacom Business chief officer Vuyani Jarana said on Wednesday that the mobile operator had an “aggressive” deployment planned for home fibre broadband.
It has appointed Louisa van Beek as managing executive to lead the roll-out into homes and businesses. Jarana said the fibre project was Vodacom’s next big area of focus.
MTN is also understood to have big fibre plans, and recently began trenching streets in its first fibre suburbs in Cape Town. This follows earlier deployments in a few Johannesburg suburbs, including Lonehill.
MTN, with a budget of R10billion for 2015, is outspending bigger rival Vodacom this year on capital projects. Although most of this is directed at the mobile network, it’s likely that the share being spent on fibre access networks in the coming years will expand rapidly.
Even debt-laden Cell C is ramping up its spending. Although it’s not tackling the fixed-line space (yet), it has received — led by Oger Telecom — R8-billion to spend on a 4G/LTE mobile broadband network over the next three years.
This spending is happening despite the fact that the government has still not issued the policy direction that the communications regulator, Icasa, needs to provide operators with access to additional spectrum to expand their networks.
Because of this, some players have had to reallocate parts of the spectrum they have used historically for voice services and use it instead for broadband wireless access. But the operators are rapidly running out of capacity. The government’s tardiness in finalising a spectrum policy is the main driver behind Vodacom’s proposed R7-billion acquisition of Neotel (currently the subject of an investigation by the Competition Tribunal).
But good news may be on the horizon for those desperate for access to additional spectrum — and for prospective players such as Irene Charnley’s Smile Telecoms.
Telecommunications Minister Siyabonga Cwele said this week that the government would publish its final policy on “highdemand” spectrum in the next six months. He also said he was working hard to fix the long“dysfunctional” — his word — telecoms department.
Former MTN group executive Charnley said this week that Smile Telecoms — which has just raised $365-million (about R5-billion) in new funding to expand its networks in Tanzania, Uganda and Nigeria and to expand into the Democratic Republic of Congo — is ready and willing to take on the South African incumbents in 4G/LTE wireless broadband.
Charnley criticised South African authorities for a lack of transparency in policy formulation and regulation.
She said other African countries were doing much better on this score. It was crucial, Charnley said, that the process for licensing broadband spectrum in South Africa was “clear and unambiguous”.
Operators are positioning themselves to build national LTE networks