Having four, five, or six wireless network operators in South Africa all building their own networks is not sustainable in the long run.
This is according to former MTN chief executive Zunaid Bulbulia, who is now a non-executive director at Huge Group and an adjunct professor at Wits Business School.
South Africa has six significant players which operate wireless networks with licensed spectrum for mobile telecommunications: Vodacom, MTN, Cell C, Telkom, Neotel (Liquid Telecom), and iBurst (Multisource).
Of those six, only two can “probably” continue to sustainably invest in their networks, said Bulbulia.
“Pricing will continue to be pushed downwards,” said Bulbulia.
He said not all networks need to use the same business model of investing in network infrastructure to make a return. “And frankly, it’s just too much of a waste because we’re all building in the same areas.”
Bulbulia said rather than everyone building their own networks, Vodacom and MTN should continue investing and be required to make their infrastructure available on reasonable commercial terms as part of their licence conditions.
“At the service layer, you can sustain many networks.”
The government should make unassigned International Mobile Telecommunications spectrum available to the two players with the deepest pockets, and then attach conditions to them.
“You will then unlock innovation, unlock pricing, and unlock a bridge over the digital divide,” said Bulbulia.
Multisource is wasting money
“I think Multisource is wasting its money. That’s my personal opinion,” said Bulbulia about the company’s plan to roll out an LTE-A data network.
He said Multisource will battle to make a business model that generates enough volume.
“This is a volume game. This is about having millions of customers to justify the investments you are making.”
One thing Multisource does have going for it, though, is that he knows it is considering having wholesale players on the network.
“If their play is completely consumer, I think they are going to come a horrible second and they are not going to get the return on investment.”
“However, if they get wholesale players on their network, then they will do well,” said Bulbulia.
“There are some smart guys there, so I think they know that they need to have a healthy balance of wholesale customers and consumers.”