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Fibre rollouts becoming much cheaper in South Africa

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Major fibre network operators (FNOs) have seen a considerable decline in the cost of rolling out fibre-to-the-home (FTTH) in South Africa.

During a recent investor presentation by Remgro, Vumatel CEO Dietlof Mare explained that the operator’s rollout cost had reduced from R18,000 per home with its first FTTH builds in Parkhurst in 2014 to under R4,000 in 2022.

That equates to a drop of almost 78% in rollout costs.

Mare said one of the factors driving this was the use of new rollout methods, including a combination of aerial and trenched infrastructure.

The prices that customers pay for an FTTH service are impacted significantly by how much these rollouts cost.

FNOs must ensure they can recoup their capital expenditure and eventually profit from the connections they sell to Internet Service Providers (ISPs).

In turn, the prices ISPs charge depend on how much they pay for a line from the fibre network operator.

Therefore, the reduced cost to roll out fibre is good news for customers, as it decreases how much FNOs charge ISPs and opens opportunities for ISPs to cut prices.

We asked some of the other big FNOs in South Africa how their costs to roll out FTTH in 2022 compared to when they first started.


MetroFibre

MetroFibre’s head of project management, Michael van Heerden, said the operator’s build cost is now approximately 40% cheaper than in 2015.

“The key reasons for the costs coming down include using different and new materials, improvements in and changing build methodologies and achieving greater efficiencies in the build process,” Van Heerden explained.

Interestingly, Van Heerden said there was very little difference between the cost of rolling out in an affluent suburb and a rural area or township.

“Build costs remain the same when you break it down to a per-metre rate.”

However, the cost per unit came down with smaller street frontages.


Octotel

Octotel chief operating officer Scott Cunningham said their FTTH rollout costs vary considerably from area to area.

“This is primarily influenced by property density in terms of the number of multi-dwelling environments such as apartment buildings and estates as well as average property size of the single dwelling environments,” Cunningham said.

Nevertheless, the Cape Town-based fibre operator has achieved a “significant drop” in cost per home passed over the past six years.

Cunningham attributed the decline to Octotel regularly reviewing rollout methodologies, resulting in a high level of efficiency in its network design planning and deployment.

He added that alternative methodologies such as aerial or mid-block rollouts could help reduce costs further, but this was not always an option.

“This typically has not been accepted by a large number of Western Cape Municipalities which typically results in permit delays or ultimately the permit application being refused.”

However, Octotel also believes trenched rollouts provided great network resilience.

“Only if feasibility planning requires a reduction in rollout costs for a specific area, will the alternative methods be reviewed and applied for,” said Cunningham.


Openserve

Openserve said its initial fibre rollouts cost between R7,000 and R17,000 per home, depending on the fibre reticulation methodology and population density.

Costs have dropped significantly to between R4,000 and R7,000 per home passed, depending on the area.

“The significant reduction in fibre-associated equipment has led to a reduction in costs with more suppliers compared to 2012/2013,” the operator said.

Openserve said the costs would be even lower if local governments improved wayleave application and approval processes.

“In addition, criminal activities such as vandalism or organised syndicates also contribute to higher costs as it leads to work stoppages and the need to replace equipment,” the company added.


Now read: Metrofibre signs R5 billion deal with Standard Bank

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