Vodacom’s Vuma deal is good news for fibre customers and ISPs

Fibre Internet service providers (ISPs) should be “overjoyed” with Vodacom’s acquisition of Vumatel and DFA’s fibre networks, meaning they will have packages to sell in even more areas.

That is according to Vodacom Group CEO Shameel Joosub, who has confirmed that the merged Vodacom-Vuma-DFA network would be open access.

Vumatel and Dark Fibre Africa (DFA) owner CIVH recently announced a new infrastructure company integrating its two fibre companies under one umbrella.

That comes after Vodacom and CIVH announced a multi-billion-rand deal that would transfer all their fibre assets into an as-yet-unnamed entity.

Vodacom will own a 30% co-controlling stake with the option to buy 10% more.

The Internet Service Providers’ Association (Ispa) raised concerns that Vodacom would shift Vumatel and DFA’s network to closed access, cutting off other ISPs from offering Vumatel or DFA packages.

Closed access networks give preferential access to certain ISPs, or block third-party ISPs from operating on a network entirely.

Ispa accused Vodacom of historically having a “closed access culture”, explaining that its 205 members had struggled to negotiate wholesale offerings with Vodacom.

As it stands, Vodacom’s fibre network is resold only by its own ISP business and a handful of ISPs with which the operator has partnered.

However, Vumatel CEO Dietlof Maré told MyBroadband that Vumatel would continue using an open access model, which Joosub has now reaffirmed.

In fact, Joosub had even more good news for ISPs.

Vodacom CEO Shameel Joosub (centre) answering questions following the presentation of Vodacom’s 2021/2022 annual results.

Responding to questions during the Vodacom Group’s annual results for the 2022 financial year, Joosub explained that Vodacom’s existing fibre network would automatically become open access after the deal.

“If I were an ISP, I would be overjoyed with the deal because the Vodacom infrastructure becomes open access overnight,” he said.

On an open-access basis, Vodacom must treat all ISPs the same when selling wholesale access to its network, meaning it cannot exclude them or charge different prices for packages.

Joosub said the regulatory bodies overseeing the deal, the Competition Commission and Icasa, would again confirm the condition that the network will be open access.

The CEO of South Africa’s biggest mobile network said he believed competition in the fibre market was “generally healthy”.

In addition, he explained that enabling open access on the network would also be to Vodacom’s benefit.

“Very importantly, we want it to be open access as well because a shared fibre infrastructure, especially in backhaul fibre to the base station, is extremely important to be able to get that shared cost, because it’s a big country that needs to be covered,” Joosub said.

According to Joosub, open-access fibre was also essential for Vodacom’s 5G rollouts, which will rely on fast backhaul to be a true next-generation technology.

He maintained Vodacom’s involvement would also be good news for customers, as it would allow Vuma and DFA’s networks to grow even faster, bringing fibre to a larger number of smaller towns and low-income areas.

Joosub added that there was still some way to go for fibre expansion in South Africa, with only 2.2 million homes currently having coverage from an estimated 17 million households in the country.

According to Joosub, Vodacom’s role in the new entity will primarily include providing resources for expanding its network, with Vuma and DFA continuing to work on their rollout plans.

“Their capabilities and abilities in that regard and the teams and the people that they have behind it [Vuma and DFA’s network] is very different to what Vodacom has today,” Joosub said.

“We’ll be contributing in that strategy with assets and cash,” Joosub said.

Vumatel has been put under pressure in recent months, with rivals like Openserve, MetroFibre, and Frogfoot seemingly engaging in a pricing war that is leaving the dominant fibre provider behind.

Several comparisons done by MyBroadband have shown that Vumatel is lagging behind these major players, particularly with lower-end and mid-tier packages.

It remains to be seen how Vodacom’s role in Vuma’s strategy will influence its pricing regime.

Now read: South Africa’s explosion of fibre network operators

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Vodacom’s Vuma deal is good news for fibre customers and ISPs