Telcos show resilience in 2023, eye expansion in 2024

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 14 Dec 2023
South African MNOs are planning to expand their networks next year.
South African MNOs are planning to expand their networks next year.

South African mobile network operators (MNOs) were resilient this year, during a tough economic environment worsened by load-shedding, which saw them invest billions in backup solutions to keep networks up during power cuts.

During the year, the MNOs also grappled with vandalism and theft of critical infrastructure at their base stations.

Despite these challenges, the telcos were largely profitable in 2023, and continued investing in networks to expand reach and deploy 5G.

ITWeb asked Vodacom, MTN, Telkom, Cell C and Rain about their accomplishments this year, the challenges they faced, as well as their expectations for 2024.

On the plus side

Vodacom spokesperson Byron Kennedy says most of the success stories came from the company’s African operations. In Mozambique, Vodacom launched the first 5G network, as it marked 20 years of operating in the country.

“We officially launched M-Pesa in Ethiopia and hope this will be a game-changer in boosting financial inclusion and economic growth in Africa’s second-most populous country.”

Kennedy says M-Pesa processed $364.8 billion in transactions in the past financial year.

“We also celebrated surpassing the 20 million subscriber mark in the Democratic Republic of Congo.”

Jacqui O’Sullivan, chief sustainability and corporate affairs officer at MTN SA, says this year the firm made strides in its network resilience programme and product innovation.

“MTN South Africa spearheaded a modernisation project across a number of provinces. This initiative aligns with the company’s commitment to providing innovative solutions that alleviate the challenges posed by load-shedding, while also increasing access to connectivity and the benefits of a connected world.”

According to O’Sullivan, a further R1.5 billion was earmarked for the programme.

She adds that MTN continued to expand its 5G network, not only in major metros but also in small towns across the country.

“In KwaZulu-Natal, MTN has already modernised 245 sites, with plans to reach a total of 317 by the close of 2023. This will be accompanied by the rollout of 28 new sites across the country. In the Western Cape, 230 additional 5G sites have been deployed in 2023, totalling 429, while sites with enhanced resilience are achieving 99.4% network availability.”

The introduction of 59 new 5G sites in Gauteng brings the total to 965 across the region, says O’Sullivan.

The highlight for Telkom was initiating the path towards the “Telkom of Tomorrow”, to become an infrastructure company (InfraCo), where the MNO will consolidate fundamental assets like fibre networks, data centres, satellite and marine cables.

“This move aims to unite the strengths of OneTelkom, unlocking the group’s full potential through operational synergies,” says Mooketsi Mocumi, spokesperson for Telkom.

He adds that former CFO Dirk Reyneke now assumes the chief capital projects officer role, focusing on driving capital efficiency and maximising returns for InfraCo.

“To execute our value-unlock strategy, the board greenlit the outright sale of the masts and towers business.”

According to Mocumi, through substantial investment via Openserve, Telkom has injected an additional R1.2 billion into modernising its network, accelerating fibre expansion, and maintaining a nationwide fibre network that reached 1 158 761 homes as of September 2023, marking a 20.6% increase.

Cell C says it achieved a milestone in completing its network migration at an accelerated pace in June 2023, instead of the original timeline of November 2023, realising the ambition of improving its network quality five months ahead of time.

This follows the company’s infrastructure-sharing approach, which has enabled a capex-light model, introducing a new era of “co-opetition” in the market, it says.

“This has enabled us to operate with access to approximately 28 000 towers nationwide, significantly increased national coverage and stability, particularly with increased load-shedding.

“The company’s business stabilisation efforts started yielding improved results in the third quarter, positioning it to return to growth and enhanced competitiveness in the market, establishing 2023 as a rebasing year for Cell C.”

Marina Loubser, Rain head of communications and sponsorships, says 2023 was a big year for the company.

“In May, we launched rainOne, our new product that offers unlimited 5G home WiFi and free mobile, becoming South Africa’s newest 4G mobile network operator. We are extremely proud to be able to work with Nvidia to launch GeForce NOW cloud gaming powered by Rain. More to come in 2024, after a short break.”

Tougher conditions

Mocumi points out Telkom had to contend with two major business challenges. “The main one is the country’s poor economic performance caused by the twin challenges of high inflation and rising interest rates.

“The second challenge is the rolling power cuts that increased by 79% during the first six months of the fiscal year. While this has become the new norm, it puts pressure on the operating margins.”

According to Kennedy, Vodacom SA spent R4.5 billion over four-and-a-half years to mitigate the impacts of load-shedding.

Another challenge for Vodacom is base station vandalism and theft. “The base stations of local network providers are increasingly being targeted for theft and vandalism. We are finding through our investigations that organised syndicates are coming up with unique approaches to commit this crime, which affects the industry at large, not just Vodacom.

“On average, 600 incidents per month are recorded, where sites have been impacted by theft or damage. We are losing R120 million to R130 million to vandalism and theft each year.

“In terms of the impact of load-shedding on our network and customers, we invested extensively in our network to support network resilience, leverage our new spectrum assets and enhance our IT platforms.”

2024 prospects

O’Sullivan reveals MTN’s “ultra-rural rollout”, which is part of its network optimisation project, will continue in 2024.

“We have deployed and improved the network in ultra-rural areas, including Msinga’s Tugela Ferry and Greytown rural.

“By the end of 2024, MTN will have hundreds of ultra-rural deployments in highly-underserved areas. The purpose of the ultra-rural rollout is to deploy reliable and high-speed networks to remote communities where there is lower population densities and lack of existing infrastructure, which has traditionally not been economically viable, leaving rural areas unconnected,” notes O’Sullivan.

Says Kennedy: “Without detailing our plans for 2024 for competitive reasons, we believe the continued execution of our strategy has the potential to create immense economic value in the markets where we operate, helping to address inequality by continuing to drive digital and financial inclusion.”

Cell C says it will continue to drive turnaround, stabilisation and growth in the coming year.

With a newly-formed management team, fully operational network, reduction of its asset base in line with the capex-light model and a robust strategy, the company says it is well-positioned to drive growth and profitability, with several strategic initiatives implemented to drive revenue generation.

Cell C adds it is modernising its core network to the latest architecture necessary for 5G deployment and progressing discussions with the network partner.

Says Mocumi: “We will continue our focus on driving top-line growth, the implementation of the value-unlock strategy and Telkom InfraCo.

“At the heart of this InfraCo approach is Telkom’s data-led strategy, which has two main advantages. First, we can use data insights to identify opportunities that can drive profitability in our business. Second, we can allow people to experience the power of connectivity in a way that works for them.”