Organic growth for South African internet service providers (ISPs) has slowed down and the industry is poised to grow through consolidation.
So says Simon Swanepoel, CEO of RocketNet, in a wide-ranging interview with ITWeb, after the ISP turned seven this month.
Swanepoel also believes government must play its part to work with the industry to ensure rural areas are connected to the internet.
While he laments the adverse impact of load-shedding on the South African economy, he says it has led to more people opting for fibre rather than mobile connectivity.
He also points out that while next-generation mobile technologies, such as 5G, have been touted as faster, fibre is more cost-effective and reliable during power blackouts.
“I think consolidation will obviously be inevitable. We’ve got the Maziv deal now with Vuma, Dark Fibre Africa and Herotel, which are all moving their fibre assets into a company called Maziv. So, that’s going to be interesting to watch.
“I think the Competition Commission has got some conditions for that agreement and how that company has to play nicely with ISPs.”
Fibre powerhouse
The recently-launched Maziv was born out of the Vodacom deal with Remgro unit Community Investment Ventures Holdings (CIVH).
The deal saw Vodacom – through a combination of assets of approximately R4.2 billion and cash of at least R6 billion – acquire up to 40% of the ordinary shares of a newly-created, wholly-owned subsidiary of CIVH (Maziv), which holds CIVH’s current interests in Vumatel and Dark Fibre Africa (DFA).
“We are actively looking for investment in the company to grow the business. Organic growth has slowed down a lot. Growth through consolidation and acquiring other ISPs will definitely be one of our strategies going forward.”
Adds Swanepoel: “Load-shedding has been quite challenging for many South Africans. It’s challenging for fibre network operators and ISPs. I think theft is a major thing, and a lot of fibre network operators have battery backup, including the mobile network operators, and we are seeing a lot of theft in that space.
“For example, if you live in Rivonia and the batteries at one of the major POPs [points of presence] where all the fibre terminates are stolen, you will have a large number of customers not being able to access services.
COVID dividend
“We saw massive growth in the number of subscribers during COVID-19, almost double the amount of orders that we were getting monthly. When the lockdowns were eased and people started going back to work, we saw a reduction in orders; but funny enough with load-shedding, we’ve actually seen there is quite a number of people now coming to fibre.”
With battery theft rampant at mobile network sites, he says, some times the base stations are left with no power, meaning they will not be able to operate.
“Mobile network towers require a large amount of power to operate, and if people are normally connecting to fibre in their homes through WiFi routers and there is no power or backup to power their router, a lot of people are jumping to technologies like 5G or 4G through the mobile operators. What that does is it ends up congesting the network.
“I know there is massive talk about 5G and the mobile network operators are pushing it, saying it is the best and fastest technology, but the most reliable is fibre. You can’t get anything that is quicker than light.”
According to Swanepoel, the advantage of fibre is that users don’t get a lot of network congestion.
“Fibre is a lot quicker; it runs at the speed of light. Most of the fibre network operators have provisioned enough capacity for all those lines to run. The data packets are moving in and out of the network a lot quicker. It means you are pulling data much faster, and it means your usage on the network is not as much.
“With mobile networks, if you, for example, get to a soccer game or a concert and you try to access a mobile network, the more people that are trying to access that network, the slower your speed will be, and the poorer the experience.
“I think that’s what a lot of people are seeing during load-shedding. We are seeing a lot of people streaming Netflix and the mobile tower just falls over because it can’t handle that congestion.
“Remember, the way wireless data communicates is like a two-way radio and if a lot of people are trying to access that network, it becomes congested, and I don’t think the mobile network operators have enough capacity to provide for that kind of congestion.”
Govt must come to the party
To address the digital divide between cities and rural areas, Swanepoel believes all stakeholders need to work together.
“We need to have participation from government. We need to have participation from the fibre network operators – the guys that are actually digging and putting the fibre into the ground. We also need the participation of ISPs like us, and we need to work together.
“We’ve been toying with ideas that, for example, our higher income fibre subscribers contribute a portion of their subscription fees towards rural communities.”
Having fibre in rural areas will stimulate education, he notes, adding that mobile data is still expensive for the average South African, so to stream educational services will be quite expensive.
Asked what is stopping all the stakeholders from working together to connect the rural areas, he said: “I think government is the biggest obstacle. I think if they had better rollout plans and we could do things quicker, faster and easier and subsidise a bit of that.
“For example, if government can subsidise trenching the side of the road…and invite the operators to come and put the fibre down. Civil construction is one of the most expensive components of fibre rollout, and it’s one of the biggest hindrances for most fibre network operators to go and put fibre in the rural areas.”
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