In a move similar to that announced by rival Vodacom, MTN today announced plans to roll-out its own fixed-line network.
The company says it is involved in a pilot to lay fibre optic cable in the Sandton and Rosebank areas, in Johannesburg.
The cost of the network is an estimated R10 million. However, the mobile operator says it will only establish its own fixed-line countrywide network - beyond the Johannesburg area - if it has to. This would happen if the company failed to secure partners for a shared network initiative.
Indications are the mobile operator may team up with Neotel, which is also involved in a pilot project to deploy fibre optic cable in the Sandton-Rosebank area.
Both companies are reportedly using a revolutionary technology that allows for the deployment of fibre optic cable with minimal disruption of traffic and in a short period of time. Muvoni Weltex, a small local enterprise, provides the technology.
Speaking in Johannesburg this morning, MTN SA's new MD Tim Lowry said the main focus of the project was to reduce the cost of transmission and develop a new business model.
Lowry said transmission services through Telkom make up one of MTN's largest operational costs. In the next 18 months, these costs could become the company's single largest operational cost line.
Additionally, there is more demand for transmissions capacity than Telkom can cope with, he said.
Keen on partnering
"A decision has to be made as to whether MTN will build its own network or partner with other parties, and the information gathered from the pilot will assist with that," he explained.
MTN said it will link large corporates in Sandton and Rosebank to its high-speed network, having already started linking the Johannesburg Stock Exchange.
Lowry said MTN's approach is to be pragmatic and work with Telkom, or partner with other telecoms providers to build fixed-line infrastructure and expand transmission capacity. "We have no burning desire to build our own fixed-line network as it is not our core business."
He noted Neotel is a potential partner to build the infrastructure, and the companies have discussed a possible partnership. Lowry added that MTN is open to partnering with rival Vodacom.
The country's biggest mobile operator announced, about two weeks ago, it would enter the fixed-line market, positioning itself to compete with 50%-shareholder Telkom.
Both mobile operators cited high transmission costs, related to using Telkom's network, for venturing into the fixed-line market. Vodacom has also said it would like to enter the fixed-line broadband arena - as is the trend among global mobile companies.
Richard Came, a director of Community Investment Ventures, which financed Muvoni Weltex for Neotel's pilot, says it would make sense for all three operators to partner in laying fibre optic cable.
Came says it costs about R7 million to dig a trench, and about R3 million to actually lay the cable. The telecoms operators would save considerably if they shared the cost of digging the trench and allowed their cables to lie side by side, he notes.
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