It is tough for mobile operators

Mobile operators are under pressure, with increasing levels of capital expenditure needed to keep their networks up to date.

At the same time, voice and data prices are falling.

This is according to FNB Wealth and Investments’ Wayne McCurrie, who added that smaller operators simply do not have the money to compete against Vodacom and MTN.

McCurrie explained that the South African mobile industry is saturated and there is a race to the bottom on data charges.

Add to that declining voice revenues and government interference to drive down prices, and you have a very challenging local mobile market.

Increasing network investment needed

The growing demand for mobile data and rapidly evolving network technologies means that network investments are now much higher for operators than in the past.

The fact that the government has not given operators more radio spectrum aggravates the situation, as more mobile sites are needed to serve subscribers’ data needs.

To roll out more sites is expensive and resource intensive, which in turn puts further financial pressure on operators.

With 5G starting to gain momentum globally, this situation is not likely to change anytime soon.

As 5G uses higher frequencies than 3G and 4G, it will require an even denser mobile network to operate optimally – which will further increase network investment pressure.

With the high costs associated with building and running a modern mobile data network, it is not surprising that Cell C and Telkom are roaming instead of building towers in many areas.

Rising network investments from Vodacom and MTN

The graphs below show the increasing network investments by Vodacom and MTN in recent years.


Vodacom


MTN


Now read: South Africa’s networks are ready and waiting for 5G spectrum

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It is tough for mobile operators