Fibre-to-the-business connections to keep on growing

The deployment of fibre to the business (FTTB) is expected to reach 300,000 connections by the end of 2027, driven by migration from wireless to fibre connections as the primary connection, with more people moving back to the office, according to a recent report by research firm Africa Analysis. The increasing adoption of cloud services and new technologies that require the stability of a fibre network are also growing companies’ adoption of fibre.

By the end of September 2023, the FTTB market had reached more than 243,000 active end points or links, registering a 6.4% year-on-year growth rate. Declining retail prices of many of the low-end fibre products are contributing to market growth. 

Dobek Pater, director at Africa Analysis, said FTTB is becoming the technology of choice for the primary connection, while wireless technologies are used more often for redundancy. However, only about half of business users with broadband connectivity have redundant links.

Cape Town, which has seen a rise in demand for office space, has recorded high fibre deployment. 

“From anecdotal evidence, the Western Cape (and especially the greater Cape Town area and the winelands) is seeing more business growth and also more fibre deployment. However, the large metros generally continue to see greater fibre uptake than smaller towns, though there is growth in the latter as well,” said Pater. 

Ultimately, the state of the economy is the underlying factor impacting fibre adoption. The stronger the economy, the stronger the business growth and business confidence levels, which positively impacts the adoption of fibre services

—  Dobek Pater, director at Africa Analysis

He said the uptick in fibre connections to buildings also shows fibre’s significant contribution to achieving the South African government’s connectivity targets. 

The FTTB retail market achieved annual revenue of R10.1bn from September 2022 to September last year, underscoring the economic significance of this sector in a changing telecommunications landscape, Pater said.

The biggest fibre network operators are Openserve, owned by Telkom and Dark Fibre Africa, a subsidiary of MAZIV, which is merging with Vodacom’s fibre unit. Frogfoot, Liquid and Link Africa are also key fibre network operators. BCX, Telkom’s subsidiary that provides technology services to businesses, and NTT Data are some of the biggest providers of internet and related services to corporates.

Pater warned that low economic growth, which forces many small companies to turn to lower-cost alternatives, and long lead times from order to FTTB installation, may negatively affect the growth of this market.

“Ultimately, the state of the economy is the underlying factor impacting fibre adoption. The stronger the economy, the stronger the business growth and business confidence levels, which positively impacts the adoption of fibre services. Unfortunately, in much of South Africa we have been experiencing very low economic growth and business confidence levels,” he said.

Reliable network performance and stability make fibre the perfect tool for accelerating economic growth and inclusion

—  Dewald Booysen, MAZ

Pater expects more deployment of fibre network in lower-income areas. “There will be more digging in the last mile, as FTTB links are built to order (by customers) and often need to be installed the last couple of or a few hundred metres from the nearest aggregation point ... As the infrastructure expands to businesses situated in lower-income areas, we can expect more aerial fibre (suspended on street poles) rather than buried fibre.”

Commenting on the overall state of the fibre network infrastructure industry, Dewald Booysen, chief operations officer at MAZIV, said technology was advancing at a fast pace, and fibre was the most sustainable and cost-effective way to keep up with those changes. 

“Reliable network performance and stability make fibre the perfect tool for accelerating economic growth and inclusion,” he said.

An estimated R2.4bn will be allocated to the rollout of phase two of SA Connect — the government’s ambitious broadband project to bring fibre to underserved communities. The project is expected to connect more than 38,000 government facilities. “The resultant infrastructure creates the potential to further connect at least 1.9-million households as well,” said Booysen.

He said deploying fibre infrastructure involved substantial investment, from laying cables to installing distribution points. “We must also consider the costs of maintaining and supporting new and existing infrastructure. So, despite the undeniable benefits, offsetting price affordability and profitability remains a delicate balance for all players in the market.”