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How MTN and Lonehill association funded fibre

By Ujuh

The agreement between MTN and Lonehill Residents Association (LRA) to roll out fibre in the leafy suburb of Northern Johannesburg entrenches a remarkable business model in the emerging wave of fibre to the home (FTTH).

The parties announced that MTN will provide the infrastructure at its own cost and will maintain it during the lifespan of the technology. MTN has also set up a dedicated 24-hour FTTH centre to provide support services to its customers.

The alternative would have been too costly even for this leafy suburb. The LRA would have to bear the massive capital expenditure of rolling out fibre throughout the suburb. Even if the Lonehill residence could afford to raise the required capex, it would be overcapitalisation. As such; a private public partnership of sort made sense. The partnership produced a leaseback type of a deal.

A leaseback is popular in the commercial property industry for the same rationally of avoiding overcapitalisation. Even if a corporation can afford develop its own premises it choose to outsource this function which frees capital for other core business functions.

In the FTTH matter, not many neighbourhoods can actually afford the required capex.

The Lonehill initiative is set to cover more than 3000 homes with extension of fibre to the business (FTTB) in the area. The end result should be a high speed network which is capable of delivering speeds of up to 100Mbps.

The resultant pricing in the MTN/LRA deal is not bad in South African standards.

MTN said pricing its Supersonic starts at R794 per month which includes installation and devices as well as 20GB of data at 20Mbps. MTN will also provide a 50Mbps offering with 50GB of data at R1 014 per month, and a top-of-the-range 100Mbps and 100GB of data solution at R1 389 per month. These packages are based on a 24-month contract.

MTN added that customers who do not want to enter into a long term contract can opt for a monthly solution which includes a R3 000 once-off installation fee and choose solutions that start from R669 per month for the 20Mbps.

The tangible benefits are immense as captured by LRA chairman John Siddall.

“Fibre to the home will transform how we work and play. This fibre network will ensure that businesses can improve their efficiency and optimally use technologies such as video conferencing,”  said Siddall.

He added that “Residents will also be able to do a number of activities that require a high bandwidth. The deployment of this technology will ensure that we connect close circuit television which will add another layer of security which will go a long way towards making Lonehill a safer place for its residents. This fibre rollout will elevate our neighbourhood a notch higher and improve its appeal to existing residents and prospective buyers.”

 

 

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