South Africa's second national operator Neotel is gaining market share in competition with fixed-line incumbent, Telkom SA. It is using wireless technologies such as CDMA-2000 and WiMAX to provide alternatives to the incumbent's copper access network. Having bought and leased national fibre infrastructure from parastatals Transtel and Eskom and building its own fibre backbone network in parallel, Neotel is also operating as a provider of wholesale national and international connectivity to the business sector.
While Neotels financial performance is improving, Telkom has been struggling since it divested its share in the countrys leading mobile network and started its own mobile business. The company has also made losses with international investments and legal disputes and has been fined for anticompetitive behaviour. Korea Telecom has expressed an interest in acquiring part of Telkoms equity, but the South African government refused to back the deal.
To create more competition, the government has created Broadband InfraCo, a national infrastructure company to provide cheap backbone network capacity to service providers. The major mobile network operators, Vodacom and MTN, have also moved into the fixed-line and national fibre sector under a converged, service-neutral licensing regime. In addition, many municipalities in South Africa, including the country's largest cities, are implementing their own metropolitan fibre and wireless broadband networks.
All of the major players are involved in the various international submarine fibre optic cables that have reached the country in the past few years. The arrival of Seacom as the second international cable in 2009 has brought down the cost of international bandwidth dramatically. Previously, Telkom had been monopolising access to the only major cable serving the country, SAT-3/WASC/SAFE. A third international cable, EASSy landed in 2010, followed by WACS in 2011. Several additional terabit cables are scheduled to go live in 2014, connecting Africa directly to the Americas.
Key developments:Telkom invests billions into broadband infrastructure, writes off legacy assets;
SNO performance improves while incumbent struggles;
Government blocks foreign investment in Telkom SA;
Many national and metropolitan fibre network rollouts;
New international fibre optic submarine cables planned for 2014.
Companies covered in this report:
Telkom SA, Neotel (Tata), Vodacom, MTN, Broadband InfraCo, Transtel, Eskom, SITA, Sentech, Seacom, Dark Fibre Africa (DFA), Internet Solutions, FibreCo, eFive, WASACE.