Vodacom signals multimillion fiber investment, eyes dominant market position

SOUTH AFRICA – Mobile communications company Vodacom, has signalled a multimillion-dollar fibre investment plan in the next three years, as the telco eyes a dominant market position in the increasingly competitive sector.

The investment is part of Vodacom’s strategic direction of diversifying revenues from its mobile business, and it wants to connect more homes and businesses to fibre.

The group has ramped up its fibre rollout in the past year, doubling the total number of homes and businesses connected to 126,765, and Vodacom’s fibre passed 146 401 homes and businesses as of 31 March 2021.

In an interview with ITWeb, CEO Shameel Joosub said the company has planned “a few million investment over the next three years, in terms of increasing the level of fibre and making us a bigger player in the fibre space going forward. Fibre has given 100% in terms revenue and we continue to invest in the business that has been quite strong for us.”

Vodacom’s investment plan comes at a time when there is fierce competition in the fibre market, with most companies setting their sights on the township and smaller markets popularly referred to in the sector as the secondary markets.

Companies like Telkom, Vumatel, Octotel and Frogfoot have all in recent months been aggressively bidding for dominance in the fibre market, with multimillion-rand investments.

Nonetheless, Joosub said, Vodacom is ready for the war.

“There is competition, but I think we have certain unique opportunities; we are doing an incredibly good job in terms of covering secondary towns but also picking up opportunities in the big cities, as well as in places where there is still no fibre.

“It’s been quite a nice mix. Remember, when you have 14,500 sites, you have 14,500 points that you can very easily connect back into your transition network, so building fibre off the mobile network is, of course, logical for the telco going forward. The key focus going forward will be diversification of revenue from mobile into fixed as well.”

The planned massive investment by Vodacom is unsurprising, as the telco has experienced colossal data usage growth in the past year alone.

“Building fibre off the mobile network is, of course, logical for the telco going forward. The key focus going forward will be diversification of revenue from mobile into fixed as well”

Shameel Joosub – CEO, Vodacom

The increased demand for connectivity helped Vodacom post a healthy rise in revenue growth of 7% to US$4 billion for the year ended March 2021.

In the year, data traffic in South Africa increased by 55.6%, with Vodacom saying smart devices on its network were up by 9.5% to 23.2 million, while 4G devices on the network increased by 22% to 15.7 million.

Vodacom Business service revenue increased by 11.3% to US$1.1 billion, which the company says was supported by its innovative work-from-home solutions.

Furthermore, Joosub says, the performance was enabled by investments in new services and digital IT capabilities such as business and artificial intelligence.

“Given the sudden shifts in customer behaviour patterns, we invested heavily in the resilience of our networks to cope with significant increases in mobile data traffic volumes to keep families connected, enable businesses to operate, facilitate online learning and assist governments in providing critical services,” he explains.

Spectrum hold-up

Turning to the contentious spectrum allocation delays, Joosub says this has not impacted on the group’s master plan.

“You can actually see we have stepped up the level of capex investment where we spent US$723.5 million just last year, and we will probably spend US$752 million this coming year.”

The long wait for spectrum was further delayed when the planned auction in March faced new obstacles after multiple court applications were lodged by MTN and Telkom and broadcaster Etv.

The three are all in court challenging some aspects of the process being managed by the regulator, the Independent Communications Authority of South Africa (ICASA).

In the wake of the delay, ICASA has since extended temporary emergency spectrum issued to operators under the COVID-19 National Disaster Regulations.

This, Joosub said: “has supported Vodacom network capacity and highlights the urgent need for high-demand spectrum to be allocated through ICASA’s ITA process. We continue to see the assignment of high-demand spectrum as instrumental to data pricing.”

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