We recently examined the state of the 5G performance in South Africa, and we now turn our attention to the fixed broadband side. In July 2022, our Speedtest Global Index® ranked South Africa in 95th place, with a median download speed of 35.90 Mbps and a median upload speed of 29.56 Mbps. South Africa has come a long way in the past four years in terms of fixed network performance. In July 2019, for instance, South Africa ranked 112th with fixed median download and upload speeds of 9.95 Mbps and 5.56 Mbps, respectively.
- Speedtest Intelligence® data shows that fixed broadband speeds in South Africa have doubled over the past three years – from 15.11 Mbps median download speed in Q1-Q2 2020 to 31.34 Mbps in Q1-Q2 2022, benefiting from increased competition and growth in Fiber to the Home subscriptions.
- South Africa still has a long way to go to catch up with other BRICS countries, Brazil, Russia, India, and China. Telecom regulator, ICASA, could consider setting a minimum broadband speed to stimulate market adoption outside of urban areas, which are currently underserved.
- With only 10% of households connected to broadband, there is substantial room for growth, and operators are looking to extend fiber beyond affluent areas. Furthermore, there is a growing number of mergers and acquisitions in the market. South Africa is home to a complex fiber market with alternative ISPs competing for market share using open fiber networks deployed by Telkom’s wholesale division, Openserve, and alternative FNOs such as Vumatel.
- Cool Ideas took the lead in 1H 2022 with a 48.32 Mbps median upload speed and 47.89 Mbps download speed, but its market lead could be soon challenged as many operators are already offering speeds in excess of 30 Mbps.
- Gauteng, home to the country’s largest city, Johannesburg, had the best median fixed broadband download speeds of 38.47 Mbps and 27.92 Mbps upload speeds. South African capital city, Johannesburg, was the fastest of the five cities we analyzed.
South African median fixed speeds doubled in the past three years, thanks to fiber growth
Speedtest Intelligence® data shows that fixed broadband speeds in South Africa have more than doubled over the past three years — moving from 15.11 Mbps median download speed in Q1-Q2 2020 to 31.34 Mbps in Q1-Q2 2022; for upload speed, the increase has been more pronounced, improving from a median upload speed of 8.85 Mbps in Q1-Q2 2020 to 24.50 Mbps in Q1-Q2 2022. These improvements are due to increased market competition and a growing number of fiber connections. According to South African regulator Independent Communications Authority of South Africa (ICASA), fixed line broadband subscriptions increased by 20.4% in 2021, while Fiber to the Home/Building (FTTH/B) subscriptions grew by 34.4%. In fact, FTTH/B subscriptions have increased 44 times over the past seven years: from 31,843 in September 2015 to 1.4 million in September 2021, steadily replacing DSL lines.
However, fixed broadband adoption is still relatively low. There are 17.4 million households in South Africa, and if we translate the overall number of broadband subscriptions into household adoption, this equates to just 10% of South African households having fixed broadband in September 2021. On one hand, this marks an improvement over 2020, when less than one-tenth (8.3%) of households had access to fixed internet at home, according to the General Household Survey. But on the other hand, there was — and is — a significant urban/rural divide. 14% of households in metropolitan areas had access to the Internet at home compared to only 0.8% of rural households according to the same survey.
To help narrow the digital divide, the South African government’s South Africa Connect (SA Connect) initiative was put in place in 2013. Phase One of Digital Development focused on prioritized provision of broadband connection services to government buildings, health facilities, schools, post offices, and police stations in eight districts, but its scope has been reduced due to Covid-19 pandemic. Now, SA Connect entered a second stage, which aims to cover 100% of the population with at least 10 Mbps and 80% of the population with 100 Mbps broadband access by 2030, which forms part of government’s commitment to bridge the digital divide, especially in rural communities, while also advancing the digital economy.
There is still room to grow for South Africa to catch up with other BRICS markets
Using Speedtest Intelligence data, we compared fixed download speeds across the BRICS countries, which include five major emerging economies: Brazil, Russia, India, China, and South Africa during Q1-Q2 2022. China topped the rankings across the BRICS countries, posting a median download speed of nearly 160 Mbps. South Africa, meanwhile, finished last, indicating that South Africa still has room to grow in terms of fixed broadband performance and adoption.
India has already taken steps to improve fixed broadband performance by setting minimum broadband speeds. We have commented how TRAI, the Telecom Regulatory Authority of India, published several recommendations designed to increase fixed broadband network rollouts and adoption. The recommendations also aim to help achieve India’s targets of universal broadband provision of 50 Mbps, as well as breaking into the top-50 of the ITU’s ICT Development Index by 2022.
South Africa could also look to Chile for inspiration on how to improve its fixed broadband performance. Currently, Chile tops the ranking in terms of global fixed broadband performance, with a fixed median download speed of 213.73 Mbps. While it took time, Chile’s healthy fixed broadband performance is due to a mix of a supportive regulatory environment and robust market competition. According to Chilean regulator Subtel, 83% of fixed broadband connections comprise speeds of 100 Mbps thanks to a growing penetration of fiber to the home (FFTH).
The rise of fiber network operators
There are multiple drivers behind the growth of fiber in South Africa, ranging from Telkom retiring its legacy infrastructure, consumer demand for faster speeds, and the growing consumption of bandwidth-hungry content, from video streaming services to cloud-based enterprise applications. As such, the fixed incumbent, Telkom, is no longer the default wholesale infrastructure provider, which was the case with DSL. The increasing competition in South Africa gave birth to a very competitive and vibrant fiber wholesale market. In fact, South Africa is experiencing a fiber network operators (FNOs) boom, with over 30 FNOs deploying their own infrastructure and sharing it with other operators on an open-access basis.
It’s important to note the difference between FNOs and ISPs: an FNO manages and owns fiber optic connectivity infrastructure; an ISP handles everything customer related, such as getting customers online, support, billing, and more. ISPs often have relationships with multiple FNOs and negotiate deals with them. FNOs like Vumatel, Fibrehoods, Link Africa, Dark Fiber Africa, Openserve, Frogfoot, and Metro Fiber continue to increase their footprint. The competition between FNOs is heating up, both in terms of geographical footprint and on pricing. For instance, MetroFibre recently introduced pay-as-you-go internet options to target underserved areas, while others are doubling speeds offered at the same price.
Vumatel is the market leader in terms of homes passed — the number of premises to which an operator has the capability to connect — and active subscribers, with a self-reported 39% market share across both measures. Vumatel’s fiber network passes 1.5 million homes and has over 450,000 customers connected to its fiber network, with over 30,000 kilometers of fiber network. Vumatel acquired companies such as SADV and Fibrehoods to expand its reach. Vumatel, so far, has mostly focused on big metropolitan areas, but it is now expanding to high-density lower-income areas by offering prepaid packages. In 2017, Vumatel announced a pilot project where residents of Alexandria township could get access to 100 Mbps speeds for less than ZAR 100 (USD 5.88) per month, but the project hasn’t yet come to fruition.
With fiber leveling the competitive field, Telkom created a wholesale fixed-line division, Openserve, in 2015. Openserve’s legal separation will be completed on September 1, 2022 when it will become a wholly owned subsidiary of Telkom Group. There are over 200 ISPs (Internet Service Providers) using its open access network. Openserve reported that by June 30, 2022, its fiber network passed over 890,000 homes — a 45.3% increase from 612,451 a year earlier. At the same time, the number of households connected to its fiber network increased by 35.2% to 414,847, representing an FTTH connectivity rate of 46.6%. Openserve fiber network has the largest reach, with more than 170,000 kilometers of fiber deployed. The operator invested capex to the tune of R 3,472 million (USD 204 million) to modernize and expand the network in 2021 to replace legacy copper networks with fiber. To monetize its investment, Openserve informed ISPs that it plans to stop offering ADSL services from October 2021 in areas within its fiber footprint, with the ultimate goal of shutting down copper based services by 2024.
Frogfoot acquired LinkAfrica’s Western Cape FTTH assets in September 2021 to help its presence in the Western Cape, where Frogfoot increased the number of homes passed to 312,000. Currently, the FNO’s fiber network has passed 336,000 homes, connecting 128,600 homes and 12,500 businesses. In June 2022, Frogfoot announced its Century Promotion, which enables participating ISPs to offer discounted rates on four different line speeds. As a result, end-users can obtain top-tier 1 Gbps connections for less than ZAR 1,000 (USD 58.76). Frogfoot’s ultimate goal is for consumers to subscribe to a 50 Mbps package at well below ZAR 500 (ZAR 29.38) per month.
Vodacom is also looking to increase its market presence in the fixed broadband space. In November 2021, it acquired a 30% stake in a newly combined InfaCo, which combines assets of Community Investment Ventures Holdings (CIVH) and Vodafcom’s fiber assets with an option to increase the stake to 40%. The deal, which is currently undergoing regulatory approval processes, gives Vodacom access to the fiber networks of Vumatel and Dark Fiber Africa (DFA), which are both owned by CIVH. Vumatel’s fiber network will be merged with Vodacom’s FTTH and fiber-to-the-business assets.
Cool Ideas took the lead as fiber land grab heats up
Using Speedtest Intelligence®, we compared fixed broadband performance in South Africa during Q1-Q2 2022 across the country’s top providers, those that account for 3% or more of total test samples, which leaves smaller ISPs off our rankings. Our data shows that Cool Ideas led the South African fixed broadband market in the first half of 2022. Cool Ideas reached almost 50 Mbps symmetrical speeds, with 48.32 Mbps median upload speed and 47.89 Mbps download speed. Afrihost, Webafrica, Vox Telecom, Axxess, and rain achieved median download speeds in excess of 30 Mbps. Operator performance in the region can be heavily impacted by the technology offered, with pure FTTH provider Cool Ideas topping our rankings. Fixed download speeds, however, are just one part of the story. Another is coverage. Operators such as Afrihost, MWEB, Vox Telecom, and Axxess use MTN and Vodacom’s mobile networks to offer Fixed Wireless Access (FWA) to expand their coverage in areas where there is no fiber or ADSL coverage.
Cool Ideas, which only offers fiber to homes and businesses, was acquired by Afrihost, but it continues to operate as a standalone brand. The ISP is using Vumatel’s network, which has announced that it will increase speeds for its customers. Cool Ideas customers have recently been notified that their 20/10 Mbps package will be upgraded to 50/50 Mbps for free, while the 100/100 Mbps package will double to 200/200 Mbps.
Afrihost, which finished second in our rankings, offers a range of technologies including FTTH, fixed wireless, ADSL, VDSL, and mobile data. Afrihost and Cool Ideas merged in August 2021 after South Africa’s Competition Commission approved Afrihost buying a majority stake in Cool Ideas. Cool Ideas continues to operate its brand and business separately from Afrihost, with the same employees and management team it had before the merger. Afrihost also owns a majority stake in another South African ISP, Axxess.
Rain, formerly known as iBurst and Wireless Business Solutions (WBS), offers 4G and 5G mobile data to its customers. In November 2019, it became the first company in Africa to launch a 5G Standalone network. Its 5G network currently covers 6 million households in South Africa, including those in Johannesburg, Tshwane, Cape Town, and Potchefstroom in the North West province. Rain plans to expand to new areas and towns along the Garden Route and in Gauteng and Mpumalanga.
MWEB’s technology mix includes DSL, fiber, and LTE. It is a consumer arm of Dimension Data.
HeroTel operates in more than 400 towns and 107 municipalities, with over 150,000 homes passed. It has almost 130,000 broadband subscriptions, 45% of which use fiber, with the remainder using FWA services. CIVH, owner of Vumatel, acquired a 45% stake in Herotel in February 2022, and the company wants to increase its stake in Herotel to 100%. The goal is to expand the footprint of fiber to lower income communities in smaller towns and cities, where Herotel already has a network.
Vox Telecom offers DSL using Telkom’s network and provides fiber using open access fiber networks. Vox Telecom acquired Frogfoot, an FNO, in July 2015.
Gauteng province speeds ahead the country’s average
Across the nine South African provinces, Gauteng is the smallest by land mass, but it’s also the most populous and wealthiest province, home to the country’s largest city, Johannesburg. Given the population and economics of the province, It’s perhaps no surprise that Gauteng had the best median fixed broadband download and upload speeds at 38.47 Mbps and 27.92 Mbps, respectively. Gauteng’s leading speeds are due to several operators posting median download speeds faster than 40 Mbps, such as Afrihost, Axxess, Cool Ideas, Vox Telecom, and Webafrica.
Northern Cape, on the other hand, the largest but most sparsely populated province in South Africa, was home to a median download speed three times lower than the country’s average of 31.34 Mbps.
Residents of Johannesburg had the fastest broadband
Johannesburg performed well across the five cities we looked at in terms of median download and upload speeds. Download speeds in Johannesburg ranged from 25.53 Mbps to 51.49 Mbps, while in Port Elizabeth, speeds were much lower, ranging from 6.36 Mbps to 30.11 Mbps. Typically fiber networks first reach rich and affluent communities that present a fertile ground for their services. For example, a northern suburb of Johannesburg–Parkhurst–was Vumatel’s first suburb.
More is needed to improve fixed networks performance and adoption
Increasing download speeds require more investment in broadband infrastructure from ISPs and FNOs, but most importantly there is a need for reliable underlying infrastructure. Several undersea cables landed in South Africa, including WACS, EASSy, Seacom, SAT3/SAFE, and SACS, with the Equanio and 2Africa cables coming online soon, which helps increase network capacity. However, operators are also facing issues related to infrastructure reliability and availability such as loadshedding (rolling power outages). Affordability is another matter that needs to be addressed.