While Eskom plunges SA into darkness, network operators have emerged as the unsung heroes, upholding economic activity by maintaining network connectivity.
Network operators — including Vodacom, MTN, Telkom and the others that comprise the Association of Comms and Technology (ACT) — have had to dig deep to maintain connectivity and the digital economy even as factories fall silent.
They have spent multiple millions over the dark days of rolling high-stage power cuts to equip towers with backup batteries and procure diesel to power generators. In 2022 alone, they spent hundreds of millions of rand on diesel. The estimated spend for 2023 at this point is more than R1.1bn.
Such costs have a crippling effect on economic growth and are unsustainable.
The Electricity Regulation Amendment Bill, though approved by the cabinet in March, languishes in parliament, bound for prolonged public hearings. This delay hampers the industry's ability to implement sustainable energy generation plans, worsening SA's energy crisis.
The telecommunications sector, vital as it is, cannot shoulder alone the additional cost of keeping the national communications infrastructure alive.
Connectivity, especially in the wake of the pandemic, is the lifeblood of our modern economy. Since 2020 it has been the digital backbone enabling remote working, e-learning, e-commerce and the potential of telemedicine in our fragile health system.
Connectivity is the oxygen of the modern economy. It is the indispensable infrastructure that enables virtually every sector, from financial services to retail, agriculture to education.
An Accenture report recently found that digital technologies can generate more than R5-trillion in value for industry and society in SA over the next decade. Their use in government services alone can add just over R2-trillion in value.
With the ever-increasing demand for connectivity, the telecommunications sector enables other sectors.
It forms the very foundations on which SA's economic future will be built, a fact underlined by a study by AlphaBeta, which estimated SA could capture a potential annual economic affect of up to $116bn (R2.2-trillion) in 2030 through supportive policies that enable full utilisation of digital technologies. This would be an eye-watering 26% of the country's estimated GDP by 2030.
The easiest way to help telecommunications businesses realise this opportunity now is to alleviate the burden of diesel costs they bear by extending the diesel refund relaxations to the sector. ACT has applied to the Treasury for the same treatment that was extended recently to food manufacturers.
Diesel rebates have been available since 2000 to provide relief from the general fuel levy and the road accident fund levy to primary sectors such as farming, forestry, fishing and mining. The telecommunications sector, given its economic significance, merits similar consideration.
Much of the rationale in the refund is for diesel that is not used on the road and powers fixed generators, which is the case for communications infrastructure. For example, diesel fuels thousands of base stations, is used in the core network of servers, data storage and backhaul equipment and for cooling critical equipment.
Extending this refund to the sector poses minimal hurdles. All major telecom companies are VAT registered, aligning seamlessly with the refund system's requirements.
The diesel refund system also contains adequate safeguards against misuse. Applicants must transparently account for diesel purchased and demonstrate it was used for off-road purposes not subject to normal levies.
A refund of less then R4/l of diesel could significantly ease cash flow constraints, shielding consumers from added costs. This would align with the government's vision of universal access to the digital economy, fostering an effective public-private partnership to sustain connectivity amid the power crisis.
By subsidising these unexpected fuel costs through rebates, it will alleviate the pressure on operators to cut costs elsewhere or curtail investment.
President Cyril Ramaphosa's remarks at the launch of the Commission on the Fourth Industrial Revolution resonate: “The digital Industrial Revolution will reshape the world.”
He has consistently emphasised positioning SA on the global stage and has pushed for prompt policy and strategy formulation. The bedrock of genuine competitiveness lies in our capacity to maintain seamless connectivity.
As the nation grapples with the power crisis, we should rally behind network operators, recognising their pivotal role in safeguarding our economic future. Through timely rebates, we can strengthen our digital backbone, ensuring resilience in the face of adversity.
This is not just a call to action, but a rallying cry for a connected, thriving SA.
* Batyi is CEO of the ACT
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