How much Vodacom, MTN, and Telkom spent on their South African networks

South Africa’s three biggest mobile networks spent over R12 billion improving their networks in just half a year.

One of the major cost drivers in mobile network capital expenditure (capex) over the past few years has been improving resilience against power outages.

With severely increased load-shedding since 2021, operators have been forced to upgrade their base stations and backhaul connections with better backup power to avoid network downtime due to electricity outages.

Batteries carry high once-off initial costs, while fuel-powered generators can become very expensive to run over time.

Vodacom has spent over R4 billion on backup power between 2021 and 2023, with plans to spend billions more in the near future.

MTN has said it spent “billions” on batteries over the past few years.

In October 2023, MTN revealed it had deployed 20,000 batteries, 5,000 rectifiers and 900 generators to its base stations. It also said it would spend a further R4.5–R5 billion on improving its network resilience.

Building load-shedding resilience has undoubtedly affected South African operators’ capex. They have needed to either increase their investments or redirect funds from upgrading their networks and deploying new sites.

MyBroadband analysed the latest available capex figures from mobile networks to see which spent the most and how their expenditure compared with others.

South Africa’s mobile networks have yet to report their full-year results for the 2023/2024 financial years, so we used half-year results.

In the case of Vodacom and Telkom, this covers the period from April 2023 to September 2023, while MTN’s aligns with the calendar year and covers January 2023 to June 2023.

South Africa’s biggest mobile network by subscribers and market capitalisation — Vodacom — had the highest capital expenditure.

For the six months ended September 2023, Vodacom’s capex amounted to R4.849 billion in South Africa.

While this is the largest of any operator, it was 17.1% less than the R5.847 billion the company spent over the same period in 2022.

However, Vodacom expects to take its capex to R11 billion by the end of its financial year, ramping up spending in the second half of the year.

MTN South Africa spent R4.076 billion in the first six months of 2023, which is also the first half of its financial year.

Compared to the same period in the previous year, MTN’s capex increased by 26.1% from R3.223 billion.

The company is not slowing down spending on this front, as it had budgeted to increase this to R10.1 billion for the full financial year.

By the end of September 2023, the number had climbed to R6.6 billion.

If it achieves its R10.1-billion target, it will have spent R1.3 billion more on capex in 2023 than in 2022.

Telkom’s capex for its interim financial period was R3.143 billion.

This was 14.8% less than the mobile operator spent in the same period in 2022.

Telkom said the decrease aligned with its strategy and the “cyclical nature” of capital expenses.

“The decline in mobile capex spent is due to the investment in backup power in the comparative period to mitigate the impact of accelerated load-shedding not evident in the current period,” Telkom said.

“We mainly invested in our mobile business, which expanded its mobile footprint by 4.1% to 7,684 integrated sites.”

Telkom’s authorised capital commitment for the remaining financial year was R3.539 billion, which would take its annual capex to R6.682 billion.

The chart below compares the capital expenditure of South Africa’s three largest mobile networks in the first half of their current financial years.

Cell C did not officially report any capital expenditure in its results for the 2022 financial year or the first nine months of 2023.

The company’s last official figure for capex was R195 million in its entire 2020 financial year, down substantially from R2.8 billion in 2019.

Cell C explained that it has adopted a “capex-light” model, fully decommissioning its physical radio access network (RAN) and switching all customers to a virtual RAN roaming on Vodacom and MTN infrastructure.

In 2020, the company estimated it would need to increase capex to R12.4 billion per year to catch up to the bigger operators.

However, Cell C CEO Jorge Mendes told TechCentral in November 2023 that the company will spend about R1.1 billion on capex in the next financial year.

Most of this will be spent on IT systems to facilitate its billing system migration, digital channels, and cybersecurity.

Over about three years, the capex will normalise to around R600 million annually, a fraction of what the major operators spend.

South Africa’s newest mobile network operator, Rain, is privately held, and its parent company, African Rainbow Capital, has not shared specific figures on its capex.