Friday, April 17, 2015

Cell C to Invest ZAR 8 Billion in LTE Network

South African mobile operator Cell C has said it will invest ZAR 8 billion (US $667 million) in building an LTE network over the next three years as it seeks to improve its position in the country’s highly competitive market. Cell C is South Africa’s third-largest operator. The MNO, which has partnered with Chinese vendors Huawei and ZTE as its primary network equipment suppliers, plans to deploy more than 4,000 LTE sites; however, it will continue to use 3G service in the country’s less populated areas. According to Cell C CEO Jose Dos Santos, the operator wants to ensure that every LTE site is linked to its fiber backbone in order to provide customers with the highest level of service.

South Africa’s dynamic mobile market has one of the most robust mobile broadband infrastructures on the continent, despite its lack of LTE licensing due to a year’s delay in spectrum allocation. According to recent reports, all of South Africa’s operators have been making heavy investments in mobile networks. In addition to Cell C’s ZAR 8 billion deployment, Vodacom, which has the largest number of LTE sites (about 2,000 stations), is investing ZAR 8.5 billion (US $708 million) in its network. MTN currently has 1,000 LTE sites and it is investing ZAR 10 billion (US $833 million) to improve its grid. This amount almost doubles MTN’s capex in 2014. Telkom has around 1,300 LTE sites and a very extensive fiber network.
We believe it is not only smart but also necessary for Cell C to invest in LTE infrastructure. As the demand for data services continues to increase in South Africa, we will not be surprised to see all of the country’s operators making further investments. As South African consumers experience their first access to the internet, spurred by the uptake of affordable smartphones, and learn that mobile data can be used to access financial services as well as information and entertainment content, their demands for larger data packages are increasing. Additionally, South Africans’ increased use of OTT services has led to the need for larger data allowances. While mobile packages that satisfy users’ demands for larger data allowances will bring in revenue for the country’s operators, there is the risk that this demand will outpace investment. So while Cell C is trying to bring its level of LTE deployment up to that of South Africa’s other major MNOs, its strategic rollout, particularly in heavily populated urban areas, is a good way to justify and receive a better rate of return on its investment. As time progresses the country’s operators may engage in network sharing as a way to build out infrastructure in rural areas.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues or to speak with the research team: Click here.

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