25% of South African Homes is Fiber Overbuilt

According to recent research up to 25% of South African homes fiber internet infrastructure is overbuilt. BMIT’s latest SA Broadband report shows that “Competitive intensity in the most lucrative suburbs has resulted in overbuild, where operators deploy fiber in streets which another operator has already passed.”

25% of South African Homes is Fiber Overbuilt

Unveiled By a Report 25% of South African Homes are Fiber Overbuild

According to BMIT, more than 25% of households connected by fiber-optic infrastructure are already overbuilt. Because of this duplication, infrastructure providers may see a decline in uptake, which would have a negative financial impact on those suburbs.

However, as more fiber network operators focus on the next tier of suburbs and minor cities and towns, this might not be as much of an issue.

BMIT Forecasts Ongoing Deployment of Access Fibre

Regarding the average revenue per user, a key industry metric the researcher said “BMIT forecasts ongoing deployment of access fibre in both the residential and business market, but now far more focused in the lower-Arpu market cohorts.”

It said, “This will require investors to show confidence in the emerging new business models tailored for the ‘township economy’, incorporating innovative go-to-market models along with lower-cost network deployment techniques.”

“These are either prepaid or pay-as-you-go services, with price points as low as R5/day or R100/month. Examples are prepaid models from new entrants such as Fibertime in Stellenbosch, Zing Fibre in Umlazi, and Ilitha in Mdantsane, along with challenges from mainstream fibre operators such as Vuma with its ‘Key’ offering, Frogfoot with Rise, Openserve with Prepaid Connect, among others.”

5G Rollouts Still Pose a Threat to Fibre for New Users

According to the BMIT analysis, the competition between 5G fixed-wireless operators and fiber is getting more intense for market share. “Unprecedented” investment in residential fiber has been made in previous years, according to BMIT MD Chris Geerdts, albeit some of the bigger operators “did take a breather in 2023.”

In the meantime, 5G rollouts still pose a threat to fiber for new users, even if some funding was moved to lessen the severe effects of load shedding, battery theft, and vandalism. BMIT said, “Mobile operators are also adding coverage and capacity to their 4G/LTE networks, with fixed-LTE still by far the leading broadband medium in South Africa – by coverage and by subscriber numbers.”

It also adds, “Telkom, for its part, has periodically alternated between prioritizing fibre and mobile network investments, but is now investing in both, and tailoring its 5G/LTE/fibre mix to the data needs of each suburb. It is selling its tower assets to fund the updated strategy.”

BMIT Compound Annual Growth Rate of 9.1% Between 2022 and 2027

“Customers are the ultimate beneficiaries of these investments, with the combined growth in active broadband connections projected by BMIT to grow at a compound annual growth rate of 9.1% between 2022 and 2027.”

It also stated that a “good portion” of those connections will come from fiber, with just under three million active connections predicted by BMIT’s baseline forecast scenario by 2027. During that time, seven million houses will be included.

Yet, with an estimated 30% of South Africa’s population already served by this next-generation, high-speed wireless technology, 5G service providers are chasing hard.



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