MTN may invest in fixed wireless technology as a way to gain market share as more consumers and businesses look for unlimited and fast internet access.
This comes after the group shut down talks to buy fixed-line operator Telkom, which would have given it access to a huge trove of fibre assets. “It made strategic sense and a lot of industrial logic, and would have been a compelling proposition for all stakeholders,” group CEO Ralph Mupita told Business Day TV as the company reported third-quarter earnings on Friday.
But without such a possibility at the moment, MTN is looking at other options such as expanding its footprint in fixed wireless services.
“We’re still committed to executing our own ‘in the home’ strategy. Winning the home ... you can achieve that with different technologies. Fibre is just one, but fixed wireless access is another,” he said.
As the internet continues to proliferate in SA and across the world, more consumers and businesses are looking for fast, reliable and unlimited options for internet connectivity.
Fibre remains the most affordable, quickest and stable form of internet access in the country as measured per gigabyte of data. But the upfront costs — up to R2,000 in many cases — and general unavailability in less developed parts of the country, often means fibre is out of reach for many South Africans.
For now, this is the gap that fixed wireless fills. The technology is typically characterised by an internet router or modem device that has a SIM card and can broadcast Wi-Fi signals within a home or business. Like its competitors — Vodacom, Telkom and Cell C — MTN is already a big player in this market.
MTN could make use of its extensive mobile network across the country to push this type of connectivity even further. The mobile operator recently launched new month-to-month uncapped fixed wireless products priced between R500 and R700, using 5G.
Interestingly, Rain — which is currently the only player left in the race for a tie-up with Telkom — has championed fixed wireless access since its inception.
The company recently proposed a tie-up with Telkom that would see the latter buying up its operations in exchange for shares, in an effort to challenge the dominance of Vodacom and MTN and create a company worth about R40bn.
The data-only provider — owned partly by businessmen Harris and Michael Jordaan — is credited with being the first mobile operator in SA to introduce 5G with its launch of fixed-wireless products in September 2019.
Peter Takaendesa, head of equities at Mergence Investment Managers, offered a different view. While MTN has previously stated that is looking to acquire its growth in fibre, the need to compete effectively could frustrate it into using its deep pockets to invest in its own network.
MTN could look to acquire smaller players in the market, “but continue to invest aggressively themselves. Between them and Vodacom, they can make life difficult for Telkom. They’ve got balance sheets, whereas Telkom is struggling to balance investing in fibre and investing in the mobile business.”
The advent of 5G — the fifth generation of communications technology — is meant to bring faster and more stable data signals, which would greatly improve the competitiveness of fixed wireless versus fibre.
But even then, the economics favour telecoms operators that have their own fibre to bring it all together. Cellphone towers, data centres and other telecoms infrastructure are physically connected to networks and the internet using fibre, making such cable that much more valuable.
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