Vodacom Group CTO (pictured) Dejan Kastelic said the operator is exploring a range of strategies to tackle rising opex costs and reduce its carbon footprint through innovative new technologies, including harnessing the power of hydrogen to power base stations.
In an interview with Developing Telecoms at Mobile World Congress Barcelona last month, the executive gave an update on Vodacom’s agreement with South African energy supplier Eskom, a strategy to tackle the energy crisis currently engulfing the nation.
Vodacom announced it signed a Virtual Wheeling agreement with the controversial energy supplier, in October last year. Under the agreement, Vodacom will be allowed to buy electricity from an Independent Power Producers (IPP) under the same terms and conditions as its agreement with Eskom – a move whereby Eskom loosened its monopoly on the energy market.
The agreement was struck as South Africa is undergoing an energy crisis where the national grid is unable to meet fast-rising demand. Eskom has been scheduling blackouts, known as load-shedding, to prevent the grid from being overwhelmed.
Through the Virtual Wheeling agreement, Kastelic believes there will be less load-shedding and more time for subscribers to stay online.
Kastelic told Developing Telecoms that the operator began its network improvement plan with focus not only on energy consumption but energy availability at sites, as backup cells could not provide support as energy availability “deteriorated”.
Vodacom created a subsidiary called Mezzanine to develop the Virtual Wheeling platform with Eskom which will be open to other enterprises in South Africa.
The next step for this strategy will see Vodacom work with an unnamed IPP to build a solar farm in the next six months, and a wind plant fourth months after to “wheel completely green” energy into the Eskom grid straight to its 15,000 sites.
Kastelic noted this strategy could cushion Vodacom from rising energy costs in South Africa, which increase at a “substantial” rate of between 10% to 18% per year and provide “predictable” cost estimates for the business.
“With this kind of approach you can gain control over the cost. Because if you build power generation with wind and solar, you actually control your power costs,” said Kastelic.
Currently Vodacom has contracted its IPP to eventually supply 30% of the energy it needs in South Africa to save the operator up to 10% per kWh, noted Kastelic.
But the wider ambition is to be completely reliant on sustainable energy sources in future. Vodacom stated in a report from July 2023 that its footprint produced 599,648 tonnes of CO2e, with the majority of its GHG emissions stemming from the use of diesel and electricity to power its network.
Diesel is a massive producer of GHG for the group, the report detailed, but Vodacom will be tackling this with two alternative technologies to replace diesel generators. The first is micro turbines that use a variety of less polluting, more affordable fuels such as paraffin. Micro turbines also require less time to service compared to diesel generators.
Be water
The second alternative Kastelic revealed to Developing Telecoms is a hydrogen-powered solution that Vodacom has begun piloting. The hydrogen-based solution can generate between 4 kilowatt-hours (kWh) to 10kWh depending on the needs of the site, noted Kastelic.
The challenge now is to ensure the hydrogen unit is “stable enough” to run safely and ensure the total cost of ownership is low, said the executive.
“In South Africa, it’s very important for a solution to be safe because we have a lot of theft and a lot of vandalism on our sites. We don’t want to introduce new solutions which can be harmful for the people,” said Kastelic.
But the new backup power solutions fill the CTO with excitement as it could be a cost-saving innovation that also fulfils commitments to carbon neutrality. Vodacom committed in 2022 to halve its GHG emissions and begin using renewable-energy sources in 2025.
“The question now is how can we grow with scale utilising a high number of these units? Throughout the total cost of ownership we’re looking for low servicing cycles and low cost to maintain and operate.
“Because all you need is water to power these units even if you do a closed system. That water in the tank, you only need to fill it every six months. Innovations such as this is how we are looking to make our operations greener,” said Kastelic.
Vodacom is working with two companies to harness the power of hydrogen but Kastelic did not detail their identities.
Continent wide energy problem
Load-shedding is a continent-wide problem, with Kastelic highlighting Kenya and Egypt as recent pain points for the group.
In Kenya, two outages lasted between 16-17 hours, negatively affecting around 400 sites.
Kastelic added that load shedding started in Egypt last year but “it isn’t going away” as it was expected to be a temporary problem. Vodacom is using solutions it deployed in South Africa to serve its North African market.
“The challenge for Vodacom is that instead of investing capex into the capacity and 4G coverage, we have to spend a chunk of that money on power resiliency. This of course contributes to the customer experience positively, but it’s not contributing to coverage or capacity, and that’s the challenge we are facing now,” said Kastelic.
Sharing is caring
Kastelic called for “change to regulatory frameworks” to incentivise MNOs to share the energy burden on sites, a move that would not only lower opex but also cut down on carbon emissions and boost customer experience.
In an ideal landscape, operators would share the same solar panel, battery and generator.
“Every site usually has multiple MNOs present with their own generator and batteries. Remember, we need to invest into power resiliency as well as capacity and coverage, so instead of having these duplications – if regulators would support us to actually share and co-invest into power resilience capabilities, that would actually support the whole industry, and the value would actually flow back to the customer,” said Kastelic.
Despite power resiliency adding extra hurdles for operators looking to expand their coverage in Africa, rising demand for data services means that operators have to find a way to expand – particularly in rural areas – to prevent digital exclusion.
Kastelic revealed that Vodacom is working to share networks with a major rival but did not disclose the operator or market, with an announcement planned for next year.
“We’re looking at one country, potentially with one of our rivals, to address that challenge of building rural area sites affordably. This means lean sites only with decent capacity 2G, 3G and 4G,” revealed Kastelic.
Cloudy with a chance of 4G – Vodacom 4G cloud smartphone
Alongside planned expansion of coverage, the operator is also looking to tackle the mammoth challenge of smartphone affordability, an issue that continues to persist for telecoms in developing markets.
Vodacom Group CEO Shameel Joosub revealed earlier this year that the group will launch an entry-level 4G device in South Africa to spur uptake of digital services.
Kastelic revealed that the device will be launched in two months’ time, feature VoLTE (voice over LTE), and come pre-loaded with “essential apps” such as WhatsApp and Facebook that will be stored and accessed on the cloud. The device will be “lean in terms of memory and computing” and can be made available from between US$15 to US$20.
Kastelic believes this strategy will aid in migrating subscribers who have stayed put on 2G and 3G services. “It will be in the markets where we want to tap into, because we want to migrate customers from 2G/3G and give people the experiences that can be provided by 4G technology,” said Kastelic.
