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    Home » News » Lockdown leads to data boom in South Africa

    Lockdown leads to data boom in South Africa

    By Larry Claasen16 September 2020
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    Vodacom Group CEO Shameel Joosub, centre, cutting the ribbon at the opening of the revamped Vodacom World in December 2018

    On the face of it, the Covid-19 lockdown was an inadvertent blessing for South Africa’s telecommunications operators.

    With people stuck at home for the five weeks of the hard lockdown from 27 March to 1 May, it would have been easy to think that the likes of MTN, Vodacom and Telkom would have gained from consumers posting on social media and streaming shows to their phones.

    Unlike other parts of the economy, the telecoms sector had an advantage in that under the national disaster regulations, it could continue to operate. Operators also had the advantage of the government giving them temporary access to additional radio spectrum that could facilitate high-speed broadband services.

    MTN South Africa’s data traffic was up 77% and it saw an increase of 14.1% in active data subscribers to 14.2 million

    The operators didn’t have to wait long to see the impact of the lockdown on the demand for data.

    MTN South Africa’s data traffic was up 77% and it saw an increase of 14.1% in active data subscribers to 14.2 million, said outgoing group CEO Rob Shuter on an interim results teleconference call on 6 August.

    There was a similar story at rival Vodacom South Africa. “Data traffic doubled in the quarter and usage per smart device grew 75% year on year, and 22% from the March 2020 quarter to 2.2GB/user,” said Vodacom Group CEO Shameel Joosub during an investor conference call in July.

    4G growth

    “There are now 13.2 million 4G devices connected on our network, an increase of almost 30% year on year,” Joosub said.

    Telkom also saw a surge in demand. “We’ve actually been seeing a very, very huge surge in traffic, both on the fixed side of the network and on the mobile side of the network. Luckily, our network is scalable,” said Telkom Group CEO Sipho Maseko at the group’s annual results presentation.

    “Data consumption increased just in the last two weeks of March by over 35% viewed in context. It’s the sort of typical growth that we saw in the 11 months between April of 2019 and about February of 2020,” Maseko added.

    Telkom Group CEO Sipho Maseko

    Average traffic consumption on Telkom’s network increased from about 94 petabytes (one petabyte equates to about a thousand 4K movies) per month pre-lockdown to about 127PB, which is a 33% increase to date.

    “And what were the main drivers of traffic that we saw over the period?” Maseko asked. “Largely, these were digital services, so streaming services. You see things like Netflix and YouTube really, really driving high-traffic and bandwidth consumption. DStv, the streaming component of that, working from homes or conferencing applications, whether it’s Zoom or Teams or any other applications that were there.”

    Operators’ data numbers for this period do not, however, tell the whole story. Though traffic over their networks was sharply up, it did not necessarily lead to big increases in overall earnings.

    The declines in data rates on the part of Vodacom and MTN follow pressure from the Competition Commission to cut prices

    MTN, for example, saw data revenue rise 16.7% to R7-billion for the half-year to end-June but it had cut data rates 32.6% since June 2019. The rise in data revenue could not offset the declines in voice, digital, fintech and wholesale revenues. Overall, revenue for MTN South Africa was down 2.5% to R17.6-billion for the period.

    Vodacom’s Joosub didn’t disclose data revenue for the first quarter, which started on 1 April. He did say that as of that date it implemented price reductions of 34% on average for its 30-day data bundles, and that “the increased demand more than offset these price reductions during the period”.

    Pressure

    The declines in data rates on the part of Vodacom and MTN follow pressure from the Competition Commission to cut prices.

    Maseko also did not disclose the financial impact of the increase in data traffic for Telkom, but did say the lockdown proved just how adaptable the group was.

    “Just before the lockdown was declared, we had about at least 80% of our employees working from home,” said Maseko. “At the peak of the lockdown, we had up to about 94% of our employees working from home.”

    MTN Group CEO Rob Shuter

    He said the lockdown inadvertently propelled South Africa as a whole into the digital age.

    “We saw that traffic really begin to grow during the lockdown. And it remains very, very high. And it may well be that as a country and as an economy, we’ve now reached a very, very interesting inflection point in terms of the role that broadband will start to serve in a whole lot of our daily activities.”

    • This article was originally published on Moneyweb and is used here with permission


    MTN MTN South Africa Rob Shuter Shameel Joosub Sipho Maseko Telkom top Vodacom Vodacom South Africa
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