Cell C, IS and Convergence join forces to create FibreCo

11 Nov 2010

South African mobile operator Cell C, Dimension Data division Internet Solutions (IS) and Convergence Partners – the investment firm helmed by Dimension Data chairman Andile Ngcaba – are teaming up to build a ZAR5 billion (USD725.9 million), 12,000km national fibre-optic network, TechCentral reports. The three companies have formed a new entity, named FibreCo Telecommunications, in which they are equal shareholders. The new company will build and operate a long-haul terrestrial network based on open-access principles. Construction will unfold in three stages, with the initial phase – scheduled to last two years – focusing on the rollout of a 4,500km ‘redundant core ring’ linking Gauteng, Cape Town and Durban to international landing stations — in Mtunzini on the north coast, and at Yzerfontein and Melkbosstrand above Cape Town. This first phase, which should be completed by late 2012, will cost between ZAR1.5 billion and ZAR2 billion.

The move can be perceived as a direct challenge to FibreCo’s rivals: incumbent fixed line operator Telkom, state-owned fibre operator Broadband Infraco and a consortium comprising Neotel, Vodacom and MTN. The latter recently tabled plans to build its own national fibre network, lamenting regulatory issues for its slow progress. However, unlike some of its rivals FibreCo has no plans to take fibre into consumers’ homes, preferring to concentrate on offering services to large-scale corporate users. FibreCo has indicated that it expects the falling cost of national transmission to prompt local telecoms providers into taking up the challenge and rolling out fibre-to-the-home (FTTH) access in its place.

FibreCo will allow Internet Solutions to lessen its reliance on Telkom for national connectivity, whilst giving Cell C – which is in the process of rolling out a national 3G network – access to high-capacity backhaul fibre to cater for the growing demand for wireless broadband. FibreCo says Cell C’s 3G network will provide a platform for the ‘co-location of optical transmission equipment at its base stations and provide wireless access solutions for FibreCo’s customers’. FibreCo CEO Arif Hussain stated that there is definitely room in the market for another national fibre operator, commenting: ‘If you take a three-year or five-year view, there is a need for a huge amount of additional infrastructure to meet requirements. There will be significant demand for national transmission. Everyone will need more infrastructure, not only for sheer capacity, but also for resilience’.

South Africa, Cell C