Oct 18, 2012
Cell C boss sees merit in consolidation, calls for wholesale LTE networkBack
Dubai|Engineering|Cell C|Lanun Securities|Oger Telecom|Systems|Telkom|Expansive Network|Service|Systems|Telecommunications|Telecommunications Players|Alan Knott-Craig|Dubai|Broadband|Broadband Technology
© Reuse this
The consolidation of two smaller telecommunications players into a stronger and bigger third operator would provide enough scale to compete better with MTN and Vodacom, while pushing down prices for consumers.
He noted that when an operator reduced prices, citing Cell C’s dramatic tariff reduction to a standard 99c a minute locally and to 50 other countries regardless of the network or time of day, margins become thinner.
“You need scale to drop prices and compete effectively. You can get scale by growing the business over the next three or four years, or you can try and achieve it quicker, and there is only one way [to do that] – consolidation,” he explained.
Responding to questions surrounding the 8ta-Cell C merger speculation, Knott-Craig told Engineering News Online that a potential merger with Telkom’s mobile arm would have “huge” benefits and balance the two parties’ shortfalls.
He commented that 8ta was a good company, with good assets, while Cell C, with its own expansive network, had gained some traction with the group hitting the ten-million subscriber mark this week.
Further, the government was examining options for Telkom after Cabinet rejected a potential strategic deal wherein South Korean firm KT Corp offered R2.6-billion for a 20% stake in the South African telecommunications group in June.
“The KT Corp deal was never going to be a good deal and they were dead right to dump that one,” he said, adding that no advantages would have been gained from the deal.
Knott-Craig was not concerned about government being a barrier to any new deal, particularly with a local company, saying that the State did not actually interfere as much as people believed.
However, he reaffirmed that any decision on a potential Cell C merger – locally or internationally – would need to be approved by its shareholders.
Dubai-based Oger Telecom holds a 60% direct shareholding in Cell C, as well as 15% indirect shareholding through its wholly owned subsidiary Lanun Securities. Black economic-empowerment partner CellSaf owns the remaining 25%.
No talks have been initiated, but if faced with a potential deal, Knott-Craig would prefer to partner with a local company.
Meanwhile, Knott-Craig stressed that the roll-out of long-term evolution (LTE) needed to be a national, collaborative effort if the industry was to deliver a fast, efficient and affordable LTE network to its consumers.
All the operators were working on their own roll-out of an LTE network, which he said was a good marketing ploy; but even though Cell C was in the better position, with the least number of customers and same amount of spectrum, it was still not the correct way of rolling out technology and lowering the costs.
“The operators are talking about activating hundred’s of sites out of a network of thousands of base stations, and they are built in high data-use areas, where many will jump at LTE, further reducing the [broadband] speed and possibly turning [customers] off the technology,” he explained.
The insufficient, slow roll-out of fibre connections to LTE-capable base stations, as well as limited spectrum and LTE devices and high costs – both to the consumer and operator, would hamper the performance and development of the latest broadband technology.
He believed that the industry, in a consortium, should develop one national LTE network, instead of four individual networks, and introduce the competition, in excess of 200 possible LTE service providers, for instance, on a regulated wholesale network.
This would result in a more personalised service and better quality for consumers, a properly built network and the efficient use of the right spectrum, which would not need to be divided and auctioned, and would lower the capital investment for operators.
Further, progressing to LTE Advanced on one network would be far easier and cheaper than on four different networks, Knott-Craig pointed out.
LTE Advanced specifications were close to completion and testable systems could be ready as early as 2013, becoming a reality in 2014.
He believed that the one national, wholesale network, assuming maximum footprint, which included rural coverage and a widely spread out network, would cost about R10-billion and take less than a year to build.
Edited by: Mariaan Webb© Reuse this Comment Guidelines (150 word limit)
Other Telecoms News
Enterprises can protect their data – even if employees use their own devices for work – using data protection company Check Point’s Capsule system. The system, which enforces partitions on the devices to store data and routes all business communications through a...
With the sale of Nashua Mobile's subscriber base now concluded and the unit subsequently closed, parent company Reunert planned to use the cash flows earned from the deal to “explore growth opportunities through investment”. The R1.4-billion profit from the split...
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
This Week's Magazine
JSE-listed real estate investment trust (REIT) Rebosis Property Fund achieved a distribution growth of 8.1% to 99.45c per linked unit in the financial year ended August 31, despite volatile market conditions.
A low-cost, inflatable incubator won this year’s international James Dyson design award, which aims to encourage and inspire the next generation of design engineers.
The World Bank released its ‘Doing Business 2015: Going Beyond Efficiency’ report last month and ranked South Africa 43 out of 189 global economies for its ease of doing business, with Singapore topping the rankings.
Air Products South Africa officially launched its R300-million Eastern Cape air- separation unit (ASU), at its new manufacturing facility in the Coega Industrial Development Zone (IDZ), earlier this month. It is the second facility that Air Products launched in South...
BMW South Africa (SA) has signed a power purchasing agreement with energy company Bio2Watt. The offtake partnership will bring renewable energy to the carmaker’s Rosslyn plant, north of Pretoria.