iBurst's growth stunted by site shortage

Johannesburg, 07 Mar 2007

Cash-flush iBurst's growth objectives are being constrained by an inadequate availability of suitable base station property.

MD Alan Knott-Craig Jr. says demand for base station landing sites has pushed rental prices up unrealistically and this is curtailing the company's ability to roll out base stations as fast as it is signing up subscribers.

The company currently has 35 000 broadband subscribers [7% market share] and plans to double its subscriber base to 70 000 by the end of the year, he says.

iBurst already has 128 live base stations across the country, which it aims to have almost doubled to 250 stations when its proposed capital expansion plan is completed by February 2008.

Knott-Craig says iBurst is planning to roll out 10 to 15 base stations per month to provide wider national coverage, as well as ensuring that the network infrastructure can cope with increased subscriber demands.

The limit on the number of base stations being rolled out is not because of financial constraints, Knott-Craig claims, alluding to the R350 million that the company has secured to fund its network expansion.

"If iBurst could sign up 20 base stations per month, we could triple the subscriber base easily."

Money, money, money

But, while Knott-Craig says securing money to fund base station roll out is not a problem, negotiating a fair rate with owners whose property has potential to serve as a base station is a strong challenge.

Property owners have become aware that their properties are in demand and have begun charging a premium for them, sometimes asking as much as double what would be a reasonable fee, he says. Also, big operators such as MTN and Vodacom have already signed up long-term leases for many of the potential base station locations, Knott-Craig adds.

A financial analyst, who asked not to be named, says he would not be surprised if iBurst was experiencing demand from more subscribers than it can provide with service. "They might have bottlenecks in high-density areas, where there is higher take-up than in the outlying regions."

Sentech has also said that securing elevated sites to build base stations is a problem. New entrants, if there are new entrants, will also have the same problem, says MyADSL founder Rudolph Muller.

The second challenge lies in securing new base station locations is gaining environmental approval, which takes between three to six months, Knott-Craig adds.

"Cape Town is a nightmare. We have people screaming that we don't have coverage in their area, but they go to war if we try to put up a base station near their homes."

Sharing is not good

Muller notes that sharing base station locations among operators can have adverse effects, as it can deteriorate network quality. It is, therefore, important that operators find new locations, he says.

"Operators [who struggle to find new base station locations] must be sitting on a hard spot, as the availability of new base station locations affects their ability to extend the network and good quality services," he says.