ITWeb TV: What’s next for SA’s telecoms?

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 22 Mar 2024
ACT CEO Nomvuyiso Batyi discusses the evolution of telecoms in SA, unpacking what the sunsetting of 2G and 3G network will mean for local consumers, do OEMs have the financial muscle for the local production of handsets, market consolidation, and how telcos feel about over-the-top players.  #itwebtv #associationofcommunicationandtechnology #telecoms

Despite numerous challenges – such as load-shedding and a slowing economy − South African telcos are not scaling down their 5G plans.

So says Nomvuyiso Batyi, CEO of the Association of Communications and Technology (ACT), in a recent interview with ITWeb TV.

South Africa leads the way when it comes to 5G network rollout, with expectationsthat more 5G networks will come online across the African continent this year.

MTN, Telkom and Vodacom, for example, are rolling out 5G services in SA, albeit still mostly in the big cities.

In May 2020, Vodacom went live with its 5G mobile network in three cities – Johannesburg, Pretoria and Cape Town. Rival MTN launched its 5G network in June 2020, going live with 100 sites. Last year, the mobile operator revealed it had rolled out over 2 500 5G sites across the markets in which it operates.

Mobile data-only network operator Rain was the first telco to activate a commercial 5G network, in September 2019.

Batyi tells ITWeb TV that ACT members can’t scale back on 5G, even if they wanted to. “So many [OEMs] are launching new phones…they can’t slow down. However, the problem is that those that have been left behind will continue being left behind.

“5G, in terms of how it’s rolled out, has to follow the device. So, even if government forces network operators to start rolling out in rural areas, it will not work – it has to follow the device.

“We’ll continue to see the rolling out of 5G networks in urban areas, as that’s how network design has always been in SA. There’s no point in rolling out 5G in a specific area where there are more sheep than 5G devices.”

Nomvuyiso Batyi, CEO of the Association of Comms and Technology. (Photograph by Lesley Moyo)
Nomvuyiso Batyi, CEO of the Association of Comms and Technology. (Photograph by Lesley Moyo)

According to Batyi, there’s no scaling down, but the deployment is not being done at the planned speed, as operators have had to channel funds elsewhere; for example, towards alternative power solutions to bypass load-shedding.

“It [speed of rollout] is not what you would have expected when you compare with 2020/2021 when they were launching.

“A number of things have caused this, one being load-shedding. In addition, 5G only works if you have a 5G phone, so there’s no point in rolling it out in the rural areas just yet.”

Industry voice

Officially launchedin 2022, ACT is an industry body that collectively represents the operators on non-competitive industry matters.

Cell C, Vodacom, MTN, Telkom, Rain and Liquid Intelligent Technologies banded together to launch ACT. It is led by Batyi as CEO, and Vodacom Group CEO Shameel Joosub chairs the group.

The association’s mandate is to care for the interests of licensed infrastructure-based mobile network operators, and collaborate with regulators and government on strategic national initiatives.

Asked if there’s space for another telco in SA, Batyi stated the market is headed for consolidation more than anything else.

“There is space in the market for it. If somebody sees an opportunity to invest, then yes. However, the way things are at this point, we’re more likely moving to consolidation, even if the Competition Commission doesn’t approve.

“You can see who is shrinking day-in, day-out. Every year, you can see who is struggling, so what is the next best thing? Somebody is either going to be taken over, or they close down – which one will be the best option?

“For me, it’s either ICASA or the ministry starting an inquiry on the state of the ICT sector, especially from a financial point of view, as to how attractive it will be for another player to come in.

“ICASA can check the status from a financial infrastructure point of view, for the best scenario. To bring an investor into SA, from a telco perspective, will be difficult.”

In 2022, MTN Group CEO Ralph Mupita said the consolidation of the telecoms sector is inevitable, as the market is heading towards saturation point. Mupita put forward that economies of scale and a duopolistic environment are logical ways for mobile operators to protect their margins.

That same year, MTN announced it was in discussions to take control of Telkom.However, MTN walked away from the deal after the telephony group failed to provide Africa’s largest mobile operator with assurances around exclusivity.

In January 2023, Telkom and Rain terminated discussions relating to Rain’s proposal to merge with the majority state-owned telephony group.

In July 2023, Telkom rejected a bid for a controlling stake in the company from a consortium led by former group CEO Sipho Maseko. The consortium, Afrifund Investments, presented an unsolicited offer of R46 a share for a controlling stake in SA’s third-largest mobile network.

Satellite-based connectivity

Globally, the satellite services industry is growing in a rapid development phase.

Batyi revealed the association’s research into satellite connectivity in SA is still in its infancy.

Amid the buzz around South African-born Elon Musk’s satellite company Starlink, telecoms regulator ICASA reiterated that Starlink does not have a licence to operate in the country.

“It’s good to have choice,” noted Batyi. “Equally, a person, before he or she goes to a country, needs to register and become part of the regulated framework.

“We’re not saying have the same terms and conditions, but you must be known. It’s not the first time that SA sees a satellite-based party coming into the country…but the issue is that most of them do not want to be part of the local compliance programme.

“Compliance is expensive, it is cumbersome; compliance says you must share, interconnect with people, you must connect rural people, and make sure schools are connected. These are all those things that even the smallest licensee in SA follows.

“ICASA has correctly made its voice heard on this issue and a company has to be part of the regulatory regime.”

Batyi concluded that she would like to see a ‘fit-for-purpose’ regulatory and policy framework in SA. “This means, not coming up with policy because you think this may happen in the future, but plan as to what SA should look like in the next few years.

“We’ve been doing policy and regulation the same since 1994…the landscape has totally changed. The regulator needs to be aware of the reality that we’re part of the global economy, and all policies and regulation have to be fit-for-purpose.”