Interdependence is the key to a vibrant telecoms sector

By Thinus Mulder, Chief Executive Officer, DFA.


Centurion, Pretoria, 28 Nov 2018
Read time 2min 40sec
Thinus Mulder, Chief Executive Officer, DFA.
Thinus Mulder, Chief Executive Officer, DFA.

We're all familiar with the adage: change is the only constant. And it's often how we respond and adapt to this inevitability that determines continued success and growth. This is true for individuals as well as businesses, institutions and even sectors.

The ICT sector has come to the fore as the key enabler of one of the greatest societal evolutions the world has undergone in centuries. At the same time, changing business conditions have affected companies in the sector significantly. For the most part, the impact has not been a positive one. As a recent PWC study on the industry put it, the telecoms sector is fast reaching a tipping point.

As a significant player in this industry, DFA has felt the impact firsthand. The changes have been so fundamental and far-reaching that adapting to them will require drastic steps; from re-examining business models to forming strategic alliances with associates and competitors alike. It will require us to make a radical shift from being standalone telcos to partners in a vibrant telecommunications ecosystem, says Thinus Mulder, Chief Executive Officer, DFA.

Broadly, the factors that have brought us to this point can be summarised into three categories:

* Rising capex and opex costs: cost contributors include escalating labour costs, rising fuel and electricity prices, fluctuating exchange rates as well as growing administrative costs (including wayleave fees).
* Plateauing revenues recorded by some telcos have seen a dive and investor confidence. With long-term investor profiles, infrastructure telcos could be hard hit by this and run a serious risk of capital inflows drying up.
* Inefficient business models that have failed to adapt and innovate. In many instances these have resulted in a serious overlap of offerings and a deviation from core capabilities.

The key aspect that the shift will achieve is to encourage higher levels of co-operation, collaboration and co-ordination. Whether a provider of infrastructure or services, each must define their role in the telecoms ecosystem and play it well.

For DFA, as a supplier of infrastructure at scale, this means continuing to lead the industry in an open access approach to reduce duplication and costs as well as create efficiencies and speed up deployment.

DFA has had some successes in achieving this through bilateral infrastructure sharing agreements with other infrastructure providers. It has provided them with access to its infrastructure in areas where they don't have a footprint, in return for them providing DFA with access to an equivalent portion of their infrastructure where it lacks a footprint. DFA has swapped 400km of ducting in this way, and it saved the company more than R300 million in capex costs. DFA's like-minded swapping partners, some that are its competitors, have experienced their own cost benefits from this collaboration.

But, this represents less than 5% of the total network, and much more can be done.

DFA

DFA is the premier open access fibre infrastructure and connectivity provider in South Africa. DFA finances, builds, installs, manages and maintains a world-class fibre network to transmit metro and long-haul telecommunications traffic. DFA started rolling out its fibre network in 2007, and to date, it has deployed over 10 000km of ducting infrastructure in major metros, secondary cities and smaller towns. Its network runs with an industry-leading uptime of 99.98%. DFA leases its secure transmission and backbone fibre infrastructure and provides associated connectivity services to telecommunications operators, Internet service providers, media conglomerates, tertiary education institutions, municipalities, government organisations, and other businesses, large and small, on equal terms. DFA is a level two B-BBEE contributor on the ICT sector codes.

Editorial contacts
Dark Fibre Africa Fiki Masilela (+27) 12 443 1000 fiki.masilela@dfarica.co.za
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