Will Vodacom and MTN join forces against Telkom?
Vodacom announced a few weeks ago that they will be investing heavily in their own fiber backbone network to alleviate congestion, solve backlog problems and also serve some of the needs of their new ISP, Vodacom Converged Solutions.
Not long after that MTN’s new South African Managing Director, Tim Lowry, said that the company has already started building a R 10-million pilot fiber network between Sandton and Rosebank, which will serve to assess the feasibility of this kind of initiative.
MTN won’t build countrywide fiber network
Lowry made it clear that MTN is not looking at building their own fiber backbone across the country, but can not allow a lack of transmission capacity or a backlog on installations to hold the company back.
MTN will therefore use self-provisioning as one possible solution to cut down on transmission costs and make sure backhaul bandwidth demand does not outstrip supply which is currently the case.
Lowry said that he suspects that a hybrid network – where MTN build their own network and/or partner with other companies for backhaul capacity – will be the most likely scenario.
He further motioned that MTN is investigating various partnerships with local companies like Neotel and even Vodacom.
Two rivals may partner
Vodacom said that their first priority is to self-provide to meet the growing demand for transmission, as well as to provide connectivity solutions to their customers but added that they will work with other operators, if it results in delivering better services to their customers.
While Vodacom and MTN are fierce competitors in the cellular market they are known to join forces when the business model is right, as is the case with sharing towers in remote areas.
Cell C indicated that they will not invest in their own transmission network, but said that they will definitely consider using capacity on other networks if there is viable business case.
It is clear that the mobile providers are exploring various opportunities to reduce their transmission costs. This could seriously damage Telkom’s revenues, especially since the mobile providers may use their own networks to bring fixed line services to clients, a space previously dominated by the incumbent operator.
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