Doing the maths for Steve White

[Deenem]

Disregarding the fact the Telkom has not provided any evidence of what they are spending the ADSL line rental revenues on, I'd still like to take Steve White at his word and accept that.

a) They've invested 1 billion Rand in ADSL infrastructure.
b) The ADSL access charge is to cover this investment.

OK, so let do the maths. Like any other business this size, Telkom would have issued a 10 year bond to cover this investment. At the moment 10 year bonds are attracting ~7.5% pa. Bottom line, to service this bond is costing Telkom about R17m a month.

At current user levels (100 000) that means we should all be paying R170 p/m towards paying the bond.

Steve says there will be 120 000 user in a few months time, that should mean it drops to R140 pm per user.

Lets say 200 000 users by the end of the year, that's R85 each. Get to Telkom's projected 500 000 users and it's only R34 pm.

So why then is the cheapest ADSL access charge still R270? Why am I paying R460 a month when my current share of the cost is only R170 and dropping rapidly?

Someone, please, get the man on the phone again and ask him to explain this to us.

 

[BTTB]

1 Billion??????????????

1 Billion.
I don't believe that tale especially coming from White.

What is it in this country. Everybody talks in Billions nowadays.
R6 billion here and R4 billion there.
One needs to put this into proportion like the member above who stated that it needs to be broken down to an individual level so that Joe Public can understand, taking into account the initial setup cost of R404 per installation.

 

[VQuest]

So if I go out and buy a new car - I can then charge my clients my normal hourly rate and a levy of R200 to pay off my car. Nice.

I'm not sure if your calculations are correct, but the method behind it makes sense. To think we started off paying R680 for line rental - thats absolutely shocking!

 

[Gldm]

Well according to that US department of state market report, Telkom paid in approx R750m to the undersea line. The SNO was in for around 2b of local fiber infrastructure as of last year when they were sitting idle waiting for a license (which they still are). So I can believe Telkom spent 1b over their existing network upgrading for DSL equipment, fine. But their gross income on just dsl according to their own finance report was 5b in 2004, and also several billion in the previous two years. You're telling me they can't make back their investment with a 500% gross on it?

US DOS Market Analyiss of SA telecom/fiber industry: http://strategis.ic.gc.ca/epic/internet/inimr-ri.nsf/en/gr117294e.html

Telkom 2004 finance report: http://telkom.co.za/pls/portal/docs/page/contents/minisites/ir/docs/FINAL-TKG-BOOKLET-2004.pdf

 

[LoneGunman]

can the forumites with the financial knowhow, please pass these facts n figures onto the various business-focused journalists, so that the journo's themselves have this information at their fingertips - and don't have to rely on Telkom's own supplied figures (for when Telkom decides to try 'prove' its financial needs..)

Making a short email saying 'hi, here are some verifiable facts and figures for your consideration' - with short statements and links to the pages in question - will go a long way towards 'arming' the local financial journalists against any rubbish that Telkom will most likely try and send them..

 

[Deenem]

Re: My Maths

VQuest, are you saying my maths is bad? Damn you! (Joking)

OK, take a billion rand initial captial (C), take the interest rate (I) and the loan period (N). Calculate your total interest and capital as:

C * ((1 + I)^N) = Total Repayment

and now with real numbers

1 000 000 000 * ((1+0.075) ^10) = R 2 061 031 562.

So they need to pay a little over R2bn over 10 year (120 months)
That works out R 17 175 263 per month

(It's been a while since my last economics lecture, so I's be happy if anyone were to correct me)

 

[VQuest]

VQuest, are you saying my maths is bad? Damn you! (Joking)

OK, take a billion rand initial captial (C), take the interest rate (I) and the loan period (N). Calculate your total interest and capital as:

C * ((1 + I)^N) = Total Repayment

and now with real numbers

1 000 000 000 * ((1+0.075) ^10) = R 2 061 031 562.

So they need to pay a little over R2bn over 10 year (120 months)
That works out R 17 175 263 per month

(It's been a while since my last economics lecture, so I's be happy if anyone were to correct me)

LOL no, I was just too lazy/tired to check your calculations

 

[Roman4604]

I'm no beancounter ... but surely with the profits Telkom has made in the past few years, they dont need to borrow any money from anyone ...

"Mr. White, will that be on straight or budget" ... " Naaa, straight ... bank account's looking healthy these days!"

 

[DVDA]

Regardless of the figures, Telkom needs to understand that sometimes businesses actually have to invest in themselves, without passing that cost onto the customer. Why are they so goddamn special?