[dropcap]L[/dropcap]iquid Telecom believes there is a big opportunity to exploit the spectrum assets held by Neotel, the company it acquired earlier this year for R6.5bn from India’s Tata Communications and other shareholders.
Kyle Whitehill, who was recently appointed as CEO of Liquid Telecom South Africa (formerly Neotel — it has formally changed its name), said in an interview with TechCentral on Thursday that the company — which intends tripling its capital expenditure — has valuable spectrum in three bands.
The 850MHz band (where it has 2x5MHz allocations) and the 1.8GHz band (2x12MHz) are particularly well suited for delivering wireless broadband using 4G/LTE technology, he said.
The 3.5GHz band, where it has a 2x28MHz pairing, doesn’t have any immediate obvious significant value, but could prove useful in future years for 5G, the standards for which are still being developed.
Liquid Telecom South Africa uses the 850MHz band, which it shares with analogue broadcasters (by carefully avoiding interference), to provide a code-division multiple access, or CDMA, network, offering consumers telephony and basic wireless Internet access. However, CDMA is a legacy technology and Whitehill hinted strongly that the company is likely to discontinue it, probably in favour of 4G/LTE. But he said a firm decision will only be made in the coming weeks.
“The CDMA network is currently under strategic review. We will have to move it onto a new technology,” he said. The company has about 300 towers around South Africa providing CDMA access, which consumers use mainly as a replacement for fixed-line services.
4G/LTE
It also has a limited LTE network, built using its 1.8GHz allocation, and delivered from the same towers as the CDMA network. However, because signal propagation at 1.8GHz is not as good as it is at 850MHz, the LTE network has a more limited geographic coverage.
Together, the CDMA and LTE networks have about 100 000 customers, most of which use CDMA.
The 3.5GHz band is less valuable to Liquid Telecom — at least right now, Whitehill said. Neotel historically used that band to build some (now legacy) WiMax (microwave) infrastructure. Though the band might be suitable for 5G, he does not think the technology will be ready for commercial deployment as soon as some pundits predict.
“It will happen in the early 2020s. You’d have to assume by then that people are down in the digital [dividend] spectrum… And people have made big investments in 4G, and with MIMO (multiple input, multiple output) technology, 4G will give you speeds and capacity beyond what many hoped for.”
He said Liquid Telecom is in “an incredibly strong position” with its pairing of the 850MHz and 1.8GHz bands. “You have 850 spectrum, which is brilliant for any form of high-bandwidth content, and 1 800, which has basically become the spectrum of choice for 4G. There is now an active debate in Liquid, strategically, about what do we want to do with this spectrum.”
He said one option is to follow a model similar to Rain (formerly Wireless Business Solutions), which offers roaming agreements to the mobile operators. Vodacom, which is constrained by its own, largely full spectrum bands, has already signed a deal with Rain to allow it to roam onto the company’s 4G/LTE-Advanced network. Rain, in turn, is deploying much of its infrastructure on Vodacom towers.
But it’s not only in wireless services where Liquid Telecom sees opportunity in the South African market. It also plans to invest in fibre infrastructure, particularly in national long-distance fibre, where it intends building more fibre rings — including a segment connecting Durban and Cape Town — with partners Vodacom, MTN and Sanral, but also in wiring up office buildings.
He said he’s much less keen on fibre to the home, where he believes the business case is murkier and where significant consolidation is likely to take place. “South Africa has more fibre operators per head of population than any country in the world. None of them has scale … [but] the trick with last mile is getting to scale.”
Wireless
There may be a better opportunity to provide last-mile services using wireless, Whitehill said. “Put an antenna on the side of the house, with the last few hundred metres being mobile,” he said. “There is a wireless opportunity, and that’s something we are very interested in.”
The final area of infrastructure investment for Liquid Telecom is in data centres. The company is building a new data centre at its Midrand, Johannesburg campus, which Whitehill said it plans to operate using a “more agnostic model, like the Teraco model”, with full redundancy and disaster recovery services to Cape Town.
Whitehill has also promised to fix customer service levels, an area that has long been a bugbear for clients. “There is a gap to provide a level of service beyond what the rest of the market is providing. We have a customer-first initiative that will be launched on Tuesday (27 June). The priority is to ensure that customers are getting what they want.”
Signalling its seriousness about the local market, Liquid Telecom this week said it is raising US$700m (about R9bn) in long-term debt to fund investment in network infrastructure. A significant chunk of this will be invested in the South African business, said group CEO Nic Rudnick.
The pan-African telecoms group, which is controlled by billionaire Zimbabwean businessman Strive Masiyiwa’s Econet Group, is issuing a $600m, five-year bond and is taking a new, $100m long-term bank loan. — © 2017 NewsCentral Media
