MTN seeks African skills for load-shedding

● MTN Group is seeking a visa dispensation to recruit electrical engineers from other African countries to help manage its towers and network as it transitions some infrastructure off the grid in the face of intensive load-shedding.

The skills needed are largely unavailable in South Africa, group CEO Ralph Mupita said during the company’s financial results presentation this week.

“We have to bring in people from Egypt and Nigeria but the challenge is the visa process. So under the national state of disaster we will seek special dispensation around the visa regime to enable us to bring skill sets to manage sites that are largely off-grid,” he said.

MTN whose areas of operation include Nigeria, Ghana, Rwanda, Uganda and Zambia and its competitors are in discussions with regulators to approve roaming agreements in the event of a grid collapse and the sharing of alternative power sources for their network infrastructure.

“We should be using the state of disaster as a unique opportunity to create resilience across the network,” Mupita said. “We are already sharing sites and there is an opportunity to look at how to share power, in particular, but it needs arrangements [from regulators].”

Stage 6 load-shedding results in there being no power for at least eights hours a day, and contingency plans for even lengthier blackouts or a grid collapse are gaining momentum.

“We don’t think stage 8 and total grid collapse is highly probable; it’s a low probability event. But obviously we need to plan for that low probability event,” Mupita said.

Vodacom spokesperson Byron Kennedy said: “We believe that since the solution to the electricity crisis is not imminent, it is crucial that the industry be afforded the ability to work together through a special dispensation approved by relevant authorities, including the Competition Commission, so that competitors can collaborate where necessary.”

That would enable them “to eliminate duplicate spend on generators, allowing operators to share batteries on site and look at different renewable options together so that we can forge a solution in the best interests of the South African economy”.

Vodacom consults external experts, particularly on new technology that can assist with solutions to load-shedding. The group recently appointed several energy engineering experts with the skills to “optimally source solutions”.

Kennedy said Vodacom engages with experts from countries including Britain, Germany, Bulgaria, China and Australia. “The experts are typically power solution providers with skills to develop technology solutions specifically for our needs. Expert skills in the field of energy sustainability and decarbonisation are often used to support decisions as well,” he said.

The telecom industry is spending billions of rands on diesel and batteries to generate backup power to keep the network running during load-shedding.

Vodacom has spent R2.5bn on batteries in the past three years, and an additional R300m on fuel and generators.

The company has also lost revenue as a result of customers not being able to connect during extended load-shedding, Kennedy said. In the year to December, MTN South Africa’s voice revenue declined 8.8% to R12.8bn.

MTN has upgraded battery backup for more than 80% of its sites and is extending that to more sites, while tightening security to prevent the rampant theft of batteries.

MTN will spend R9bn to improve its network quality and coverage including adding more backup power.

Mupita said some batteries will be placed in bunkers and in some areas solar panels will be installed to reduce the risk of theft.

MTN is working with New York-listed IHS Towers, which manages the tower networks of telecom companies in Africa, Latin America and the Middle East. In July last year, IHS completed the acquisition of MTN South Africa’s towers for R6.4bn. The towers are leased back to MTN.

Mupita said discussions were under way with IHS to review the service level agreement, which initially stipulated a guarantee of 98.2% uptime at stage 4.

“They are open to discuss and understand the environment is substantially different than anticipated,” he said.

“They are skilled and run networks in Nigeria with 17,000 towers with 95% of them off the grid and maintain 99.75% network availability, which they do in Nigeria. They are partners that will find the right answer.”

Charles Molapisi, CEO of MTN South

Africa, said the company is going back to the drawing board with IHS to discuss what happens at stages 6 and 8 of load-shedding.

IHS declined to comment on its plans for backup power at its infrastructure.

Molapisi said the possibility of extended power cuts had not been a consideration when MTN’s network was built, and a shortage of real estate now meant it was difficult to install solar panels.

But it was developing alternative electricity sources such as solar farms and generators, and was holding talks with the landlords of malls and office parks to deploy solar panels on the roofs.

In 2022 MTN deployed more than 2,000 generators and has established regional “war rooms” with dedicated staff and network partners focused on restoring major transmission infrastructure and base stations.

MTN and Vodacom operate in countries elsewhere in Africa that also have electricity shortages.

Kennedy said Vodacom, which operates in Lesotho, Tanzania, Mozambique and the Democratic Republic of the Congo, has learnt to approach the challenge differently. All new-build sites are designed with a larger footprint to accommodate solar and batteries as a primary source of electricity, and where renewables are not adequate, diesel generators have been built into the design.

Kennedy said the difference with other countries is that in South Africa the capacity and power consumption per site is much higher and even more so with 5G. Therefore, the site footprint and power consumption requirement is much higher, which increases the energy requirements for the site.

“Since South Africa is more industrialised than our other operations in Africa, our sites were built in urban and suburban areas with smaller footprints compared to the larger footprints of our sites located in rural areas. The space limitations, coupled with high rates of theft and vandalism, make it difficult to deploy renewable technologies that can fully replace the need for diesel generators,” he said.

Vodacom has said that, on average, 600 incidents of theft or damage are recorded each month, and the group is continuously improving security around its sites.

Mike Gresty, an investment analyst at Anchor Capital, said among the challenges MTN faces are the need to rapidly roll out backup power supply; theft and vandalism of network equipment; and the vulnerability of lower-end consumers to deteriorating economic prospects.

“It is likely then a relief that South Africa is only 22% of the group, meaning that the problems in this market are compensated for by underlying strength in demand for its services elsewhere,” Gresty added.

Still, the markets in which MTN operates are a source of frequent surprises, such as severe currency moves, geopolitical events and poorly handled regulatory interventions, he said.

“Management has got better at dealing with these events and the balance sheet is in far stronger shape to withstand them. However, they remain an ever-present reality with this share that investors need to be aware of,” he said.

MTN is developing alternative power sources such as solar farms and generators, and is in talks with the landlords of malls and office parks to deploy solar panels on the roofs