Where Telkom is winning – and losing
ADSL WEAKNESS: OVERSHADOWED BY TWO ENORMOUS BRIGHT SPOTS
Company’s financial results for six months to end September are a mixed bag.
Practically every metric in the mobile business is positive and Telkom has 1.667 million active post-paid (contract) customers who spend, on average, R191 a month.
Contrast this to Cell C, which at end June had only 1.1 million post-paid and hybrid (top-up) customers, with R227 average revenue per user (ARPU).
Cell C’s prepaid ARPU is R56 versus Telkom’s R71. That Telkom managed to increase this by 33% over the past year speaks to the success of its strategy, premised almost entirely on data. Telkom’s blended ARPU is R104.28, higher than MTN’s and Vodacom’s (both around R96) and Cell C’s R72.
Smartphone on its mobile network is up 83.9% over the past year to 3.8 million.
Telkom has also been successful at converting ADSL customers to its fibre-to-the-home (FTTH) services, driving the “attachment” rate up to 35.6% of the nearly 400 000 homes passed. It has just under 140 000 FTTH subscribers, many of whom also use their internet service provider.
Not winning
The number of Telkom ADSL customers has fallen sharply.
At end September 2016, it had a touch under one million ADSL lines (and only 19 000 active fibre connections). This dropped to 925 687 by end September 2017 and to 834 237 this September.
That’s a 17% loss in ADSL subscribers in 24 months – and with that, typically, the fixed telephone line service too.
Here you can see the effects of a blurred strategy, where up until about a year ago, the group said it would leverage its copper network, then described as a “good enough” technology.
It has realised it needs to move customers still on the copper network to either fixed LTE or fibre.
Telkom says it intends to “accelerate” this migration, “to retain our customers and maintain market share”.
Under pressure
Telkom wholly owned subsidiary BCX is still struggling and recently started a section 189 process.
Revenue remains under pressure as its voice business deteriorates further (overall revenue down 4.3%; voice revenue down 11.9% in the six months).
It expects a “continued decline in voice and spend”.