South Africa's major telecoms shift focus: from resilience spending to 4G and 5G rollout

South Africa’s biggest telecommunication companies spent nearly R11-billion in 2023 and during the early months of 2024 to make their networks more resilient to the effects of Eskom blackouts.

Vodacom, MTN and Telkom collectively spent R10.8-billion over the past 15 months on solar power, generators and lithium batteries to keep their cellphone towers across South Africa running during blackouts. The towers, critical for mobile and internet connectivity, depend on a stable electricity supply to function efficiently.

In spending billions of rands to insulate their networks from the 17-year-long electricity crisis, the telecommunications giants sacrificed higher profits, as the funds could have been used to expand and grow their operations.

With the energy crisis fading — there have been no blackouts for more than seven months —Vodacom, MTN and Telkom are preparing to redirect their investments and capital into growth initiatives.

The next phase of investments by the three companies in South Africa will involve rolling out 4G and 5G services and bringing into the country devices and routers that are enabled with the services. The 4G and 5G services promise faster internet connectivity, easier access to information and the ability to transfer large amounts of data in real-time across wireless networks. South Africa still relies heavily on much slower 3G services.

MTN Group CEO Ralph Mupita said the company had set aside R9.7-billion for its network in South Africa, including rolling out the 5G service, especially from 2025.

“In the future, we are deploying capital for expanding and accelerating 5G coverage. We had pulled that back a bit to focus on making the network resilient. We won’t be putting much investment into resilience,” said Mupita on Monday during a briefing with journalists.

The threat of Eskom blackouts remains, as the power utility has not declared a permanent end to the electricity crisis. Because of this, Mupita said MTN would continue to spend money on network resilience initiatives. Of the R9.7-billion MTN has set aside, R1.5-billion will go towards network resilience initiatives.

“We can never say the electricity crisis is behind us. We are ready for any kind of lower levels of power availability if they happen in the future,” said Mupita.

Vodacom, MTN and Telkom’s investments in their networks have paid off. Their average network availability — a measure of reliability in the face of disruptions, including blackouts — is well above the 90% mark.

Telkom is also investing heavily in 4G and 5G services, but the company has not unveiled its future capital expenditure programme.

Telkom CEO Serame Taukobong said growth for the company would come from its mobile business and deploying more capital to grow it.

“The mobile network is now ready for the 2G and 3G migration into the 4G segment,” said Taukobong during Telkom’s interim results presentation on Monday, adding that the company planned to make a move into the 5G arena.

Regarding product offerings, Taukobong said there were growth opportunities in the mobile data segment.

“The driver of mobile is the data proposition. It is a mix of lower-end packages all the way to high ones. It is not usually big bundles, but it is smaller bundles, which are a key driver in the prepaid segment. As subscribers are moving from the 2G into the 4G segment, that is where we will pick up most of the demand,” said Taukobong.

The Independent Communications Authority of South Africa released radio frequency spectrum in March 2022 — for the first time in 18 years ​​— enabling Vodacom, MTN and Telkom to make 4G or 5G investments.

Spectrum refers to the radio frequencies or waves on which data and information are transmitted. The release of more spectrum paves the way for mobile operators to offer a better-quality service to consumers, with fewer dropped calls, faster internet download speeds and the promise of lower mobile data costs.

Read more: Communications giants to pump R20bn into SA economy to roll out 5G technology

Vodacom revealed that it recently spent R4.3-billion on its network to support network resilience and leverage its newly acquired spectrum to expand its telecommunication services.

Vodacom Group CEO Shameel Joosub said capital expenditure would be accelerated in 2025 to support the company’s investments into the 4G service.

“From a coverage perspective, we added 531 new 4G sites in the last six months, representing growth of 7.6%, which is expected to support revenue growth,” said Joosub on 11 November during the company’s interim results presentation. DM