Sifiso Dabengwa, Former Group CEO, MTN: Interview

Interview: Sifiso Dabengwa

How best can broadband be deployed nationally to ensure universal access?

SIFISO DABENGWA: The National Broadband and ICT Policies are making robust progress in their goal to achieve universal broadband for all. However, execution is imperative and successful implementation will require that it be carried out jointly by the public and private sectors. The private sector can play a role by investing in infrastructure, for example by expanding 3G, fibre and long-term evolution (LTE) to assure that as much of the population as possible is covered.

There needs to be a technology mix to reach the rural areas, including things such as Wi-Fi, but generally fibre should be everywhere. Apart from determining the appropriate technology mix, a minimum speed must be set out as well. Once more spectrum is released, some lower frequencies can become available that may carry less data but can travel further, which can service the more rural areas.

While Telkom has been tasked to spearhead the rollout, the private sector should play a role as the executing arm. This might require some opening up and sharing of infrastructure, or local loop unbundling. Sharing fibre can improve efficiency and focus operators on competing on price, but the industry is capital-intensive and discouraging operators from investing in infrastructure would be a concern.

To what extent has a lack of spectrum limited the rollout of high-speed mobile services?

DABENGWA: New allocation of spectrum will be key for operators to expand and improve their high-speed mobile service offerings. Once the long-awaited digital migration is complete, more spectrum will become available and should be allocated in a fair and transparent manner. I believe there should be spectrum fees with the regulator imposing rules to ensure efficient usage of the spectrum. Government has the opportunity to enact obligations around broadband policy for issues like rural coverage, even if it is not commercially viable, as a result of obtaining extra spectrum. Allocating via auctions can be risky as this takes away funds from the industry and is not necessarily very efficient. A proposition to allocate spectrum for a nominal fee with payments for rights to its use on an on-going basis is appealing.

In terms of the impact on 4G LTE services, it is minimal at the moment. The key issue in this regard is the affordability of devices, as in the short term only a small segment of the market has devices capable of higher speeds and capacity. In the long term, as devices become more affordable, more can be done and hopefully high-speed services won’t be inhibited.

How can increased data usage provide potential for average revenue per user (ARPU) growth?

DABENGWA: Data is a core growth area as voice continues to decline. As a result, we are seeing some pricing transformation going on with integrated bundles and unlimited voice in certain allocations. Data and services will drive ARPU but there is some dilution as the transformation from voice packages to more integrated packages continues. On the pre-paid side we are seeing higher growth and that should continue since the post-paid side, while attractive when receiving a device upfront, requires a check of credit rating scores and is not appealing to all customers.

Overall, the South African telecoms industry is going through tough times in generating profit. This is mostly due to a weak economic environment, exchange rate volatility, cuts to mobile termination rates and increasing price competition. The industry has four major operators and the recent mobile termination cuts by the Independent Communications Authority of South Africa (ICASA) were driven by the perceived need to ensure competitiveness. However, balance will be key for the industry’s sustainability with customer choice, affordability and competition.