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South Africa Phone Nets Fight Darkness

FILE: A guest types on his mobile phone as he sits below an MTN logo during the launch of its mobile money service in Johannesburg, South Africa, January 30, 2020

JOHANNESBURG - As the national power grid crumbles, leaving Africa's most advanced economy in the dark for up to 10 hours a day, mobile operators including Vodacom, MTN, and majority state-owned Telkom are scrambling to ensure their networks stay up and running.

South Africa mobile networks are spending millions to install solar panels, batteries and are even trying-out wind turbines, while targeting deals with independent power producers to supplement struggling state utility Eskom's increasingly unreliable output, three company executives told Reuters.

At stake: essential voice and data services in a nation where landlines are rare but nearly 80% of residents have access to mobile internet.

As they battle to simply mitigate the worsening crisis, telecommunications companies have seen operating costs balloon. Vodacom and MTN executives told Reuters they're having to divert capital away from much needed network upgrades and 5G rollouts.

A diesel generator. Solar panels. A bank of expensive backup batteries, theft-proofed within a block of concrete. Anything to keep power in the system.

"Our costs have gone through the roof," lamented Sitho Mdlalose, managing director of Vodacom South Africa.

Power outages have cost South Africa's number two operator MTN some 640 million rand ($36 million) in service revenue in the past year, forcing it to downgrade its medium-term margin target.

Telkom has incurred over 150 million rand in additional costs in its third quarter ended December 2022 alone.

Vodacom - majority owned by London-listed Vodafone - is spending well over 300 million rand a year on incremental costs, including fuel, battery replacements, repairs and security, Mdlalose told Reuters.

While most network towers in South Africa are equipped with a battery for backup power, more advanced systems are less common. MTN, for example, has 12,900 towers in South Africa but only around 3,000 diesel generators and solar panels at a few pilot sites.

Companies concentrate those extra resources on high-revenue sites, mainly in larger metro areas, officials said. But even city residents struggle when hours-long outages outlast backup measures.

"You just have to wait for the electricity to come back or move around town to get network," said lawyer and businesswoman Mphahlele, who lives in a provincial capital of around a half million residents.

Meanwhile, mobile providers said government regulations are blocking potential solutions, such as sharing backup power infrastructure with their competitors, and revealed they're lobbying authorities to help ease the pain.

"Government and business must jointly seize this moment," MTN Group Chief Executive Ralph Mupita told investors last month. "If we do not act as a country, for sure we risk becoming a failed nation state."

Mary-Jane Mphahlele, an attorney who also runs a small travel agency in the city of Polokwane, experiences that lost economic activity every time the power is cut.

"New clients can't call me ... That means no money is going to come into my business," the 29-year-old said. "It's hell."

Overall, the power crisis and logistical constraints are expected to erase 2 percentage points from economic growth this year, according to the South African Reserve Bank governor.