The latest entrant into SA's mobile market, 8ta, aims to increase its penetration from 25% to about 35%-40% of the population by March 2012.
The operator's radio access network (RAN) executive Brett Nash said yesterday that the current coverage is via 942 base station sites on air, with construction complete on 1 209 sites. The predicted coverage for March next year is 2 000 sites, which will lead to the increased penetration.
World Wide Worx MD Arthur Goldstuck says simply covering the urban areas will help 8ta more than exceed the penetration goal of about 40%.
Nash added that the total rollout will be about 3 600 sites over the next four years. “All of these sites have single RAN dual technology deployment.” The sites carry both 2G and 3G services.
He explained that having a single RAN means essentially flattening the architecture, allowing for higher speeds in the future.
Triple speed
Telkom's mobile arm has announced its 21Mbps HSPA+ network has been live for about two months, but is not yet offered to subscribers since it is being tested.
8ta managing executive Amith Maharaj said consumers will have access in the next week, upgrading them from 7.2Mbps to 21Mbps. Subscribers will experience real world speeds of about 8-12Mbps in areas with good coverage.
Goldstuck says this upgrade will be cause for greater confidence in 8ta's ability to compete in the data environment. “Bundling with Telkom's ADSL services would, however, be a far greater source of business growth.”
Quiet network
8ta's competitors, Vodacom, MTN and Cell C, have already started rolling out 42Mbps HSPA+ networks.
Maharaj said, however, that 8ta has an advantage, because it has a quiet network so the number of subscribers as opposed to the number of base stations means its traffic is significantly lower and average speeds are not too far off that of its competitors.
“The 42Mbps networks are still very theoretical and a matter of positioning rather than what the average customers can access or experience. If everyone was on a 42Mbps network using a capable modem, the limitations of wireless spectrum would reduce the experience to little better than a 1Mbps line,” says Goldstuck.
WWW Strategy MD Steven Ambrose says most consumers do not really care about how fast the speed of the connection is since price and availability are usually paramount.
“The actual speed is very theoretical and has essentially been a marketing tool in the speed war between the carriers.”
Terminal decline
Although 8ta signed up 1.2 million subscribers since its launch last October, it has deactivated 400 000 SIM cards in the same time.
It turned over R81 million, but made an operating loss of R1.1 billion in the year to March. Telkom expects 8ta's operating loss to be higher in the 2012 financial year.
Telkom has also pushed out the timeframe for 8ta to break even on an operating profit basis by a year, to 2014, and expects it to only be cash-generative in 2015.
The company has earmarked capital spend of R6 billion to roll out a network, but this amount could come in lower at the end of the five-year period.
Analysts have questioned whether 8ta will be successful as it is going head-to-head with operators such as MTN and Vodacom, which have the bulk of the market tied up and have spent 16 years rolling out networks.
“Telkom need to make their mobile venture successful. Their fixed-line business is in terminal decline, and mobile appears to be a solution to their current problems. In order to compete with MTN and Vodacom, Telkom, via 8ta, need to have their own network up and running, as roaming on MTN, as they are currently doing, will limit their profitability and flexibility, especially if they wish to compete aggressively,” says Ambrose.
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