South African mobile operators Vodacom and MTN are competing for the crown of best mobile network in South Africa, while Telkom is busy playing catch up, and Cell C is getting left behind.
Capital expenditure (CAPEX) shows how much companies like network operators invest in their networks. It also includes upgrades to a mobile operator’s radio access network and other infrastructure it uses to provide coverage.
Recently, battery backup power at base stations has become a major component of operators’ CAPEX. As a result, operators that out-invest their competitors tend to offer better network coverage, provided they adopt the correct strategy for their capital expenditure.
According to industry data, South Africa’s largest mobile network operator, Vodacom, recorded capital expenditure of US$697 million for its South African operations during its 2021 financial year. This reflects an increase of 10.6 per cent from the previous year.
For several years, MTN sustained a higher CAPEX than Vodacom, but the operator surpassed the country’s second-biggest operator in 2020.
MTN has repeatedly outperformed Vodacom in Mobile Network Speed Test Reports. The operator recently scored an average download speed of 73.39Mbps in the first quarter of 2022, beating Vodacom’s average of 44.32Mbps.
MTN reported capital expenditure of US$651 million on its South African operations in 2021, compared to US$471 million in 2020.
MTN has spent over 60 per cent of CAPEX on its radio access network and site infrastructure across its entire group. However, only 10 per cent was used on its core and transmission networks.
Telkom’s mobile network was launched over 15 years after Vodacom and MTN; however, the operator is far behind the other two operators regarding coverage. As a result, Telkom has entered into roaming agreements with Vodacom and MTN to extend its reach.
Telkom’s 2020/2021 financials indicate its CAPEX approach of about US$481 million, with US$281 million going towards its mobile division. That represents an increase of 22.5 per cent in CAPEX.
Cell C is actively disarming its radio access network and cutting expenditure due to severe financial challenges. As it stands, its capital expenditure was US$1.1 million in 2020.
Cell C’s net service revenue was US$ 813 313 in 2020, and its outstanding debt has put it on the brink of bankruptcy. As a result, cell C has chosen to stop investing in its cellular infrastructure.