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SA's FTTH prices slowly trending down – Africa Analysis

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Many South African households have enjoyed steady price reductions in the fiber-to-the-home (FTTH) market, according to insights from Ofentse Dazela, director of pricing research at Africa Analysis.

The reductions have come in the form of price discount promotions, offered for a specific period, and in the form of free speed upgrades, where the line speed packages are temporarily or permanently upgraded.

Africa Analysis found that in the past two years, monthly fees of uncapped FTTH bundles have shown a slow downward trend. However, average subscription prices of uncapped line speed offers remained relatively flat quarter-over-quarter (QoQ) as of March 2023.

The analysis leverages Africa Analysis' extensive FTTH pricing database and focuses on the ten biggest fiber network operators (FNOs) in terms of houses passed and ten top Internet service providers (ISPs) in terms of customer base as of March 2023.

MetroFibre Networx (MFN), Link Africa (whose FTTH network was acquired by Frogfoot and MFN), Openserve, ThinkSpeed, Vodacom and Vumatel are among the FNOs which implemented speed upgrades in recent months, Dazela said.

The median monthly subscription prices were notably higher on Evotel and TT Connect's networks while the lowest priced uncapped deals were sold through a direct access player, Herotel.

In the open access market, the best-priced deals were sold through MFN's network.

Wholesale market

Between January 2023 and March 2023, several FNOs made price and line speed changes to their wholesale FTTH packages.

"This is the first time in the past two years that FNOs have increased their pricing. Over this time, the FNOs have generally increased line speeds," Dazela said.

Frogfoot increased speeds on most of its packages. Octotel increased wholesale prices of three of its packages while also permanently increasing the speeds of products that have been on promotion since November 2022.

MFN increased line speeds on its FTTH packages. Customers who previously had a symmetrical 50 Mbit/s, 100 Mbit/s or 200 Mbit/s line speed packages were moved to 250 Mbit/s, 500 Mbit/s and 1 Gbit/s at no extra charge from March 1, 2023.

Telkom-owned Openserve implemented speed upgrades on most of its FTTH packages from April 1, 2023.

March 2023 uncapped FTTH bundle pricing of top six SA fiber operators (pricing in Rand).   (Source: Africa Analysis, June 2023)
March 2023 uncapped FTTH bundle pricing of top six SA fiber operators (pricing in Rand).
(Source: Africa Analysis, June 2023)

Herotel continued to offer the lowest monthly fees for uncapped packages in the past two years, but recently increased prices of its uncapped offers (50 Mbit/s, 75 Mbit/s and 100 Mbit/s) by an average of 8.3%.

"The announced wholesale price increases will have an impact on both the consumers and the ISPs. Many of these FNOs justified the price adjustments as inflationary increases. While the speed upgrades are mostly implemented by FNOs at no additional charge, the ISPs will have to purchase additional capacity to accommodate the higher speeds. Thus, speed upgrade will have a positive spinoff on FNOs from a revenue perspective," Dazela added.

"ISPs that are not willing to absorb additional IPC charges for extra capacity to accommodate the higher speeds are likely to pass these fees on to customers in the form of increased retail prices. These FTTH line speed upgrades will provide a significant benefit for customers who were on lower speeds," he explained.

ISP market

Afrihost, Herotel and MWEB were among the large ISPs that were deemed to be pursuing aggressive low pricing strategies.

Even though MWEB is the largest ISP in terms of the customer base, it is also leading price-based competition in the market.

Axis currently has the most expensive packages and Axxess, Supersonic and Vodacom were also trending on the higher side amongst the leading ISPs.

The average monthly prices of uncapped FTTH plans show a small decline QoQ over the years. However, during the first quarter of 2023, the monthly fees of these uncapped offers have remained relatively flat.

Quarterly median pricing of uncapped FTTH bundles in South Africa (pricing in Rand).   (Source: Africa Analysis, June 2023)
Quarterly median pricing of uncapped FTTH bundles in South Africa (pricing in Rand).
(Source: Africa Analysis, June 2023)

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"While the fees charged by the top ISPs for the month-to-month uncapped offerings show a slow downward trend over the past two years, the general expectation is the market will probably see a wave of increases introduced by ISPs in line with FNOs that have recently confirmed wholesale prices for the first time in two years," Dazela predicted.

He also emphasized that while the FNOs have a large impact on ISP pricing, the pricing analysis by Africa Analysis shows that over the past two years, some ISPs have continued to increase pricing.

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*Top image source: Freepik.

— Paula Gilbert, Editor, Connecting Africa

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