Private equity firm Convergence Partners is exploring the building of a R5 billion, 14 000km, national fibre backbone, to be called “Fiberco”.
Convergence Partners chairman Andile Ngcaba confirmed this morning that Fiberco is one of the initiatives being explored.
“Fiberco is one initiative and I will get back to you later,” Ngcaba said in a short telephone conversation.
Ngcaba, a former Department of Communications director-general, and currently also the chairman of Dimension Data SA, has been building extensive interests in the South African communications sector. This includes stakes in the Seacom east coast undersea cable and a plan to build a satellite. Japanese telecommunications group NTT, in a R24 billion deal, is currently buying dimension Data.
Ngcaba's Elephant Consortium recently shed its stake in fixed-line operator Telkom and mobile provider Vodacom.
Gustav Smit, CEO of Dark Fibre Africa, says discussions about the formation of Fiberco and the initiative to build a 14 000km national fibre-optic backbone had been circulating in the industry for a while, but that talks were still at an early stage.
“This is essentially Andile's initiative and e-mails between interested parties have been circulating, but no contracts have been signed to date,” he says.
Smit says Fiberco's network would make sense if it did not duplicate networks that were already being built or were in the planning stages by other operators.
“It costs R350 per metre to lay fibre-optic cable, so a project of this size would be very expensive and capital intensive,” he says.
Telkom has embarked on a long-term strategy to upgrade and expand its fibre-optic network, and Neotel is in a consortium with cellular network operators MTN and Vodcom to lay at least 5 000km of fibre-optic cable.
Dimension Data subsidiary Internet Solutions, which has long harboured an ambition to build its own network, appears to welcome such an initiative.
“Generically speaking, we have long held the view that there is not enough competition or sharing in the national domestic long haul networks,” says Internet Solutions chief marketing officer Hillel Shrock.
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