According to industry reports, South Africa’s biggest fibre network operator (FNO), Vumatel, has nearly one million customers connected to its fibre-to-the-home (FTTH) network.
That means Vumatel has almost as many home fibre customers as Telkom had DSL clients at the peak of the legacy broadband technology’s adoption in South Africa in early 2016.
Vumatel has managed this impressive feat in just over a decade since launching its pivotal Parkhurst project in 2014.
That move proved that rolling out FTTH in South Africa could be financially feasible, provided a neighbourhood showed sufficient interest in fast and uncapped Internet.
Vumatel’s success helped spur a fibre “land grab” in South Africa. FNOs initially targeted leafy suburbs where many wealthier households were willing to pay for faster and more reliable connectivity than DSL.
Initially, FTTH’s prices were expensive and limited to more affluent neighbourhoods.
Over time, FTTH technology and rollouts became more affordable. Prices declined due to greater economies of scale and a revolution in international bandwidth costs. FNOs expanded to middle-income neighbourhoods, smaller towns, and eventually lower-income areas.
Most fibre providers operate on an open-access basis, selling their lines wholesale to Internet service providers (ISPs), who handle the customer-facing side of matters.
That approach ensured pricing and service delivery competition while the FNOs could remain focused on infrastructure expansion.
According to a study by the Internet Service Providers Association of South Africa, roughly 10.61 million households and 32 million people had access to an open-access FTTH network by early 2024.
Its early-mover advantage and aggressive rollouts allowed Vumatel to become the leading force in the market.
Vumatel’s network now covers over 2 million households, accounting for almost a fifth of the country’s open-access FTTH capacity.
The second-largest FNO — Telkom’s Openserve — had 1.29 million homes passed with FTTH by September 2024, with 640,730 households connected.
The other biggest FNOs include Herotel, MetroFibre, Frogfoot, Octotel, and Evotel, all of which have hundreds of thousands of homes passed with FTTH.
Vumatel expects that demand for FTTH will steadily increase in 2025 as consumers continue to adopt digital services and increase their bandwidth usage.
The company said its strategy of making affordable high-speed fibre connectivity available to the broader South African population remained its focus.
While it regards improving its connection rate and monetising existing assets as critical, it plans to continue building and expanding its coverage following demand.
The FNO is also optimistic about industry consolidation despite a major setback for its business in 2024.
In late October 2024, the Competition Tribunal blocked Vodacom’s planned acquisition of CIVH’s Maziv — a holding company for Vumatel and DFA’s fibre assets.
The deal would have seen Vodacom take up a 30% share in Maziv and provide additional funding for Vumatel to expand its footprint further.
Vumatel has increasingly focused on lower-income neighbourhoods and informal settlements in recent years.
It launched South Africa’s cheapest-ever 10Mbps FTTH product — Vuma Key — in Alexandra in September 2024.
Vuma Key is intended for poorer areas where households earn a combined monthly income of less than US$261.10.
The company has also built a strong customer base with its Vuma Reach product, aimed at households earning between US$261.10 and US$1566.60 monthly.
More than a third of Vumatel’s connected customers are using this product, a testament to the company’s commitment to making affordable connectivity more readily available.
Industry analysts and stakeholders were convinced that the Vodacom-Maziv deal would be approved, given that the conditions included spending US$522 million on rollouts in low-income areas and creating 10,000 jobs.
It would not only unlock more funding for Vumatel but could also signal to the rest of the industry that consolidation is an international trend in telecommunications, as other operators have argued.
Trade and industry minister Parks Tau is appealing the Tribunal’s order, while Vodacom’s main rival MTN has supported the appeal.
