Telkom-KT Corp deal bad news for Vodacom and MTN: analyst

Speaking in an interview on Summit TV, Giyose said that KT Corp is known for its low-cost broadband services in Korea.

Giyose argued that KT Corp will import their low margin and low return model to South Africa, which is good news for consumers but bad news for shareholders.
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That is what analysts said about Tata and Neotel and look how that failed.


20% is also such a small stake and will further be used by Telkom to say don't enforce rules on them as they bring in foreign investment into the country. Telkom needs to be split up before this happens. Telkom cannot say they are private since they don't comply with the ECA wrt forced voice line rental. Split it up.

Giyose added that KT Corp’s entrance into South Africa will be very disruptive in the local telecoms market, forcing Vodacom and MTN to relook their business models around data.
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How will any change to Telkom force Vodacom and MTN relook their data. Their prices are already so much expensive they cannot compete at price at all and posting huge losses due to bad deals in Nigeria, Zimbabwe, severance packages etc.

Compare 8Ta 10Gb cost For R200 and iBurst 10Gb +10Gb for R200 cost to a standard package of Telephone Line + Adsl line rental + ISP for a 1Mb line you are looking at roughly R650. That is more than 3 times as expensive.
 
I go around here screaming for Telkom's death. And still do, even blindly at times with no rationale.
And this is one of those times.

If KT can bring around some changes to at least bring in the needed experience at senior managerial levels to implement what they do in South Korea. Then by all means, welcome to the fray.

I just don't get their gameplan when it comes to investing here in SA.
With a 20% stake, how much influence and ROI can they look to yield?
And what are their plans for the future?
Do they just want some diversity in a growing market where profits are high with the current monopoly?
Or are they planning to (as the article makes mention of) do a turn around and get around to their "low margin and low return" philosophy?

Also the last few years have not been returning impressive numbers for Telkom.
Profits down, ADSL subscriber numbers dropping, MultiLinks...
 
I don't see it happening. If you look at broadband in Korea, most of it is focussed in cities like Seoul where people live in high and medium rise apartment buildings in densely populated urban areas. It's much cheaper to provide FTTH there than it would be here. It's not that easy to provide cheap quality broadband. Also, Telkom will not give up their high margins easily.

Telkom needs to be split up. Other players need to build a real back haul network rivalling Telkom. Finally, people are placing too much hope on LTE. I hope it doesn't disappoint.
 
Boris Becker said:
I don't see it happening. If you look at broadband in Korea, most of it is focussed in cities like Seoul where people live in high and medium rise apartment buildings in densely populated urban areas. It's much cheaper to provide FTTH there than it would be here. It's not that easy to provide cheap quality broadband. Also, Telkom will not give up their high margins easily.

Telkom needs to be split up. Other players need to build a real back haul network rivalling Telkom. Finally, people are placing too much hope on LTE. I hope it doesn't disappoint.
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Telkom and Samsung recently announced plans to team up to offer VOD, Triple Play etc. over high speed DSL on Samsung TV's in future. Samsung is KOREAN. KT Corp is KOREAN.

Does it all start to make sense now?

Maybe we should give this deal a chance to prove itself before dooming it to failure from the beginning. We have all cried for Triple Play, VOD and IPTV for years and when it finally is around the corner, we start damning it.Doesn't make sense..
 
Gaz{M} said:
Telkom and Samsung recently announced plans to team up to offer VOD, Triple Play etc. over high speed DSL on Samsung TV's in future. Samsung is KOREAN. KT Corp is KOREAN.

Does it all start to make sense now?

Maybe we should give this deal a chance to prove itself before dooming it to failure from the beginning. We have all cried for Triple Play, VOD and IPTV for years and when it finally is around the corner, we start damning it.Doesn't make sense..
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Seriously? Wow. I didn't say it wasn't possible that we would get those services, the question is whether they will be affordable and how long they will take. It's nice that you think Telkom is just going to give up their high margins just to make you happy. Sorry but I prefer to live in the real world son.

Do you know how cheap telecommunications are in India? Strange then that Neotel/Tata didn't translate that to SA. WOW :erm:
 
skimread said:
20% is also such a small stake and will further be used by Telkom to say don't enforce rules on them as they bring in foreign investment into the country. Telkom needs to be split up before this happens. Telkom cannot say they are private since they don't comply with the ECA wrt forced voice line rental. Split it up.
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Just remember, the government owns 39.8% stake in Telkom. So a large amount of share distribution is determined by the state. They would sooner not let a foreign company own a majority stake in such a large investment of theirs.
 
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