Making money from South Africa’s cheapest fibre

Despite being substantially cheaper than other products on the market, Vumatel’s Vuma Key service functions similarly to most generally available fibre-to-the-home (FTTH) offerings in South Africa.
Instead of significantly constraining the service to keep costs down, Vuma Key has some important differences from other FTTH products that make it profitable despite its cheaper price.
Vuma Key officially launched in mid-September 2024, with a starting price of R99 for a 10/5Mbps connection with uncapped data.
Users have the option to pay for their service on a month-to-month basis with a debit order or to buy prepaid access from several retailers.
A MyBroadband analysis found Vuma Key was substantially cheaper than any other FTTH products on the market, including low-income-focused services like Openserve Web Connect and Frogfoot Air.
While Vumatel’s other offering for less affluent neighbourhoods, Vuma Reach, is aimed at households with incomes between R5,000 and R30,000 per month, Vuma Key targets areas with those earning below R5,000 per month.
The low price is necessary to encourage uptake but requires significantly better cost efficiencies than conventional rollouts.
Vuma has emphasised that it is not cross-subsidising its Key offering with profits from users in more affluent areas.
From the outset, the product’s premise was that it needed to be sustainable to be successful.
The company said that the time it would take for a Vuma Key customer to be profitable varied depending on the package they used, their recharge frequency, and overall product and service mix uptake within a specific area.
In Vuma Key neighbourhoods, cables run from poles mounted throughout the township or settlement, similar to how Herotel or Openserve’s aerial fibre infrastructure works.
Herotel previously told MyBroadband that this type of rollout is cheaper than trenching, which is used by most fibre network operators (FNOs).
Trenching requires digging and installing infrastructure underneath and on top of the ground, which is time-consuming, labour intensive, and requires going through arduous wayleave approvals from local authorities.
Running fibre cables through the air is not only faster but significantly more affordable.

Because of the higher concentration of homes within Vuma Key’s target market areas, the FNO can also reach more customers with less infrastructure, reducing the cost.
When Vuma ran its proof-of-concept of the service in Alexandra, it experimented with several different operational structures.
These included a reseller model where locals acted as agents and first-line support staff.
These distribution service providers (DSPs) would sell packages directly to tenants and homeowners.
It also piloted having centralised points of presence in certain houses, which were connected with fibre to a nearby mast.
From these hubs, Vuma would run multiple Ethernet cables to other homes.
However, the company has changed this and instead installed optical network terminals (ONTs) in each customer’s home.
Vumatel said this change was based on customer feedback, technical design considerations, and its commercial strategy and had become the standard format for the service.

Device limits per connection
Unlike some other budget FTTH products, the Vuma Key router includes an Ethernet port, so a user can connect devices like smart TVs and computers with a physical link.
The fact that users live close to each other may be a benefit for rollouts, but it could also create an issue with multiple homes sharing the same connection.
To address this and ensure a high-quality Internet experience, Vuma Key limits the number of devices that can connect to a router on its most affordable 10/5Mbps package to four.
The corrugated iron that many of the houses in townships and informal settlements are made of can also block or impede Wi-Fi signals.
That means that users are unlikely to suffer from signal interference from their neighbours.
Other Vuma Key and Vuma Reach products support connecting up to 10 devices.