Friday 13 October 2023

South Africa's township fibre expands giving businesses the platform to penetrate the uncharted economy as millions get connected #R118Million

South Africa's fibre network operators (FNOs) are making significant strides in rolling out infrastructure to densely-populated lower-income communities.

 This trend began in 2017 when Vumatel, under the leadership of founder Niel Schoeman, announced plans to launch in Alexandra, a Johannesburg township known for its challenging operating conditions.


Schoeman's vision was to offer 100Mbps uncapped fibre for just R89 per month, a price point that would make high-speed internet accessible to residents at an affordable rate. 

However, it was crucial for the project to be financially sustainable and not rely on cross-subsidization or charity.

The plan involved running fibre along existing poles instead of trenching, which helped reduce deployment costs. 

Additionally, the high population density of the area allowed for economies of scale, further optimizing the project's feasibility.

Despite the initial optimism, Vumatel's Alexandra project faced numerous challenges. The company struggled to obtain the necessary wayleaves from the City of Johannesburg and encountered issues with construction mafias. As a result, the project was put on hold for several years.

However, even after Schoeman's departure from Vumatel in 2018, the company continued working on a plan to expand fibre connectivity in South Africa's townships. 

In 2019, Vumatel launched a prepaid fibre-to-the-home service in Mitchell's Plain, which eventually evolved into Vuma Reach.

 While the price of this service, at R400 per month for a 20Mbps connection, was higher than initially targeted, it marked a significant step forward.

Following Vumatel's lead, other FNOs such as Telkom, Metrofibre, and Frogfoot also introduced similar products and services tailored to township communities. 

This expansion was followed by the entry of smaller players focusing exclusively on townships, further driving the accessibility of fibre connectivity.