Narrowing South Africa’s Digital Divide

Andy Songo is COO of Thabure Towerco, a new towerco that has grown out of an ISP in South Africa. Confronted with growing demands on operators by the regulator and a degrading electricity grid Thabure have begun building sites in rural South Africa. By the end of 2024 Thabure will be closing in on 250 sites. TowerXchange is pleased to share details on the latest towerco to launch in South Africa.

My name is Andy Songo and I am a born and bred South African. I am very fortunate to have timed my studies in Electrical Engineering with the take-off of South Africa’s telecoms industry. In the early 1990s, the first GSM network was launched in South Africa and then the subsequent expansion across the continent.

I started my career with Siemens deploying network rollout across several African markets including Zimbabwe, Mozambique, the Congo, Zambia and Tanzania. I have gained experience over my 18 years in the industry working on network deployment and operations of Fixed and Mobile Networks, mostly in Southern, East and West Africa. I have worked for vendors, operators and consulting firms around the world covering various technology projects before settling back in South Africa with Vodacom.

Following this I joined local company Maredi Telecom & Broadcasting where we provided RF, MW and site builds installations services for blue chip companies. It was here where we started to see the growth of towercos in the African telecoms space; American Tower, Eaton Towers and Helios Towers all arrived with a vision to support telecoms uptake in South Africa and across the continent. We saw this development and wanted to move into this new domain owning the infrastructure assets, not just building them.

Hence Thabure Towerco was formed. Thabure Towerco’s mission is to bridge the digital divide that continues to define the South African landscape. Thabure Towerco develops, owns, manages and leases out broadband infrastructure across the country, with a key focus on rural communities and township areas. It was well timed as Vodacom was just starting their black supplier development program, beginning their Deep Rural project to select black-owned entities as their deployment partners to expand their rural coverage.

Thabure Towerco was one of the of the companies to win a tender and we have a build-to-suit contract including site acquisition and tower deployment on locations identified by Vodacom. From there we have expanded our services to other MNOs to provide a full turnkey tower infrastructure service.

Since its founding Thabure Towerco has deployed 119 greenfield sites across the country with plans to reach over 150 in organic growth by the end of this year, and we are focused on both organic and acquisitive growth opportunities. Our current order book will see us double our tower portfolio over the next 18 months. We also own and operate over 100 access network points providing broadband services. All our sites are macro towers and are located in rural areas, except the few which provide coverage to urban townships areas.

Before towercos entered the telecom market, there was never really an aggressive approach providing rural coverage unlike in more urban areas. Now with towercos taking away the pressure of upfront capex investment, operators are much more interested in expanding their coverage to rural areas.

Rural coverage is challenging. There is no business case with only one tenant and both increasing tenancy ratios and exploring alternative revenue opportunities in parallel with tower deployment is the key to making it work. We are an ISP registered company providing broadband services to increase our revenues. Combined with sourcing our energy from solar deployments and careful site placement analysis, we have been able to build a workable business model.

We must be clever and look for niche opportunities where our differentiated Beyond Infrastructure approach can add value to our customers and the communities that host us. When you look at deploying a site you need to figure out how to make it turn a net positive. We locate our sites as close as we can to key communal areas such as schools, community centres and hospitals to maximise local coverage.

Schools in particular are a focus for tower deployment to help access educational content online, and we have built our own online educational platform called The VIT. The VIT helps local schools access and share educational materials. We then expand this service to surrounding areas by providing broadband to people's homes as an additional revenue stream.

The biggest challenges for us have come from external factors where we have limited control. For instance, the availability of key site commodities is a challenge in such communities. Deep rural deployments in an environment where fuel prices have been increasing steadily over the years means that your logistics costs are also rising. The interest rates cycle is also on the up. All these factors require that we manage costs tightly and seek more commercially balanced tariffs with our clients.

With the recent licence requirements as stipulated by ICASA encouraging MNOs to provide service coverage in rural areas, we see an opportunity to market these towers for colocation. There is a huge demand for more service coverage in rural areas and MNOs are now being pressured to provide these services. Interest is now coming in and we expect to see aggressive infrastructure deployment in the next 2-3 years as a result.

All our sites are on-grid, but this comes with its challenges in the current environment. Firstly, the power application process is incredibly time-consuming, and it can take well over 3 months to receive approval. Secondly, loadshedding is a major challenge across sectors of the South African economy. This has made our infrastructure highly vulnerable to vandalisation, with battery theft growing at unprecedented and alarming proportions. Of course, this also means that our infrastructure gets severely damaged in the process.

Getting power connection to our sites is very expensive in rural areas. We are almost hitting the perfect storm – higher and prolonged loadshedding results in increased battery theft, driving greater demand for alternative power, in turn driving up prices for solar solutions and opex from an insurance point of view.

We are currently working towards solar Power-as-a-Service (PaaS) which is becoming an inevitability for towercos in South Africa. The economics for off-grid power is very tight at the moment, especially when one is looking for a completely off-grid solution. The numbers we are seeing indicate that this option costs almost as much as building a new site, but the costs ease off a little as one assumes a hybrid solution at Stage 6 and Stage 4 loadshedding, making these options viable.

It is urgent that we manage the declining power situation in this country. We are looking at PaaS on a few of our sites and are considering whether to provide this ourselves or bring in an ESCO partner. In rural areas, particularly in the North, the cost of grid connection is high.

With the correct operational tools, we can provide reliable power with little operational and maintenance needs, offer a cheap alternative to expensive and unreliable grid energy, and help MNOs reach their carbon reduction targets. But at the end of the day, it is about whether our clients are prepared to pay the tariffs that would justify such an investment. It’s an on-going discussion, and hope to start on a few sites soon.

5G deployment is one of the key pillars of the current ICASA policy document, the same document driving MNOs to extend their service coverage to rural areas. We fully embrace the opportunities that will come with 5G roll-outs. Currently these are driven by the obligations that ICASA imposed on MNO’s following the successful acquisition of this valuable spectrum. The ICASA approach of “Outside-In” means that our clients need to first build infrastructure and provide 5G connectivity in rural and peri-urban townships before they deploy such in more affluent areas.

As indicated, Thabure Towerco is well positioned to provide such infrastructure using our existing towers and access points from a co-location perspective, and to roll-out new site deployments. How I see it is that when 2G first came to the country it was concentrated in the urban areas, but as 3G and 4G arrived we saw how earlier generations have moved into rural areas. MNOs only provide 2G and 3G coverage to rural communities, but it isn't just people living in the cities who want better coverage.

While it will take some time for the business case to develop, demand for 5G in rural communities will come eventually. The point is, once it does come, we will be there to provide the MNOs with the tower infrastructure they need to seamlessly plug into the passive network.

Effective site monitoring tools are critical for us; we don’t want to be driving hundreds of kilometres for nothing and need to gather all the data ahead of time before any site visits. We monitor all the data on site performance in real time so that we can reduce man hours, improve efficiency, and reduce our margins which are so important for rural networks.

A particularly prevalent challenge for rural tower networks is reducing theft and vandalism. We get hit monthly with stolen power cables and equipment but have found that the most effective solution to mitigate vandalism in rural areas is to involve the community as much as possible, building strong relationships with local stakeholders.

People need to understand the value that a telecom tower brings them, and once they recognise the critical role of that connectivity service you generate much greater security from locals who want to protect the site and keep the service live.

As a towerco, we already have the advantage of upfront tower infrastructure. The next stage from this is the backhaul; we buy the microwave broadband capacity from the MNOs and offer internet services direct to the customer.

If the infrastructure is already there, towercos should be capitalising on this and provide services in parallel with this infrastructure. There is a huge broadband gap in rural areas; fibre-to-the-home is standard in urban areas but broadband connectivity to the home is still a big challenge in remote areas, and internet services play a key role in closing the digital divide. We have a separate skilled ISP team which manages IT networking to our tower instalment and operations.