South Africa's Fibre Battleground: FNOs Focus on Lower-Income Areas with Prepaid Models

South Africa is experiencing a pivotal moment in its broadband industry as Fibre Network Operators (FNOs) pivot towards a more inclusive approach, penetrating previously overlooked sectors of the market. With the high-income demographic largely catered to by existing fibre-to-the-home (FTTH) infrastructure, the focus is now on providing affordable connectivity to lower-income households.

Companies leading this vanguard include Vumatel, Openserve, and Frogfoot, each introducing prepaid FTTH models conducive to the financial flexibility required by less affluent segments of the population. This strategy represents a response to the high level of market saturation in upscale neighborhoods and, consequently, the necessity to innovate to sustain growth.

Openserve's initiative, Prepaid Connect, launched in April 2022, exemplifies this change in tact, providing users with a 20Mbps fibre connection for an initial two-week period post-installation. Customers can maintain their uncapped internet by purchasing seven-day bundles, albeit with a notable caveat — a reactivation fee for lines dormant for over 90 days.

Frogfoot's prepaid pilot, Rise, joined the fray in October 2023 and features access vouchers starting from R69 for a week, with 10Mbps download and 5Mbps upload speeds — scaling up to 50/25Mbps for a full month's access.

However, the trailblazer in this arena is Vumatel, whose prepaid offering, Vuma Reach, has been available since October 2019. Recently, it has taken its commitment to inclusivity a step further by piloting Vuma Key, designed for those earning below R5,000 monthly, aiming to provide uncapped fibre for R100–R150 per month.

Vumatel's majority shareholder, Remgro, has keenly identified the prospective size of each product's market, with the overarching aim to bridge the digital divide exacerbated by obsolete copper infrastructure. Vumatel’s CEO, Dietlof Mare, spotlighted the vast, unpenetrated market ripe for their robust network's expansion.

As of September 2023, Vumatel leads the pack with nearly two million homes passed and 650,000 connections. Openserve is following suit, but the field remains competitive with MetroFibre, Frogfoot, Vodacom, and Herotel playing key roles in connecting South African homes to high-speed internet.

Despite the lack of specific figures from Vodacom and Herotel, it is clear that South Africa's fibre network landscape is evolving rapidly. The strategic shift to the lower-income segment suggests not only a commercial opportunity but also the potential to significantly improve internet access across varying socioeconomic strata, working toward the elimination of digital inequality.