South African Telcos Bear The Brunt Of Persistent Power Blackouts
Sustained power cuts across South Africa are putting lots of pressure on mobile network operators in the country, costing them more money and limiting the quality of services customers receive.
Since 2007, the nation has been experiencing multiple periods of load-shedding. As is evident, the market’s demand for electricity far exceeds what can be supplied by state-owned Eskom, which has been rationing power between different grid areas.
The situation is not getting any better. In 2022, South Africans endured 205 hours of rolling blackouts; coal-fired power plants broke down and power holding scrambled to afford diesel-powered generators. This year, there have been blackouts every day.
The conundrum has had a significant impact on the ability of telcos to consistently provide reliable network services. Some operators have injected millions into alternative power solutions, but customers continue to be frustrated by drops in network performance during high-level load shedding.
A spokesperson from Vodacom, the country’s biggest network carrier, reported that it would need to spend about USD 480 M on battery power as it looks to make it through stage 6 of what has been declared a national state of disaster. Other operators have made similar statements.
Generally, the blackouts have also caused an increase in the number of theft and vandalism incidents on telcos’ physical infrastructure. Under the cover of darkness, accessing the sites has become a walk in the park for criminal syndicates in search of nightly bread.
In addition to investing in battery, generator, and even clean energy solutions at their tens of thousands of base stations across the country, mobile network operators are said to be deploying technical and security teams to monitor performance and keep sites free from vandals.
These adjustments, of course, come at high costs. In February, Telkom said its third-quarter earnings declined by 13.5 percent due to load-shedding-caused inflated costs. The telco said its EBITDA declined to USD 1140 M in the quarter ending December 31st, shrinking its margins by 4.1 percent to 22.6 percent.
MTN, the second-largest operator on the turf, said load shedding costs its business around USD 38 M in 2022, which represents 3.4 percent of EBITDA. What’s more, the telco looks to bring in electrical engineers from other African countries to help manage its towers against blackouts.
Overall, Eskom’s troubles and their economic implications, will see South Africa’s telecoms industry spend way more on operations. With no remedy to the power problem in sight, there is hardly a doubt the cost of communicating will continue to rise for already frustrated customers.
