No terrors for Telkom

Denis Smit, MD of market analyst firm BMI-TechKnowledge, says 10% is a fair estimate but points out that, as prices come down because of competition, the overall market will grow at the same time. So, while it may lose market share, Telkom could actually grow its business. Smit says he expects Telkom to "compete like hell" with Neotel. "People often underestimate Telkom," he says.
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And pigs have been known to fly and elephants have turned pink, and...

No, seriously, I don't think we will ever see wired fixed line competition in SA - considering that NeOTel is primarily 'going wireless', and Telkodemonopolies is too stupid & lazy to reduce its prices and provide decent services. I am willing to eat one of Ivy's doughnuts if I am wrong.
Instead, Telkom's strategy is to introduce annuity-based product bundles as a key feature of the drive to defend voice revenues. That means bundling broadband and voice and tying consumers into contracts.
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Yes, bundling stuff == cross-subsidising.
 
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Tying people into contracts.... that sounds very competitive, bit like shooting fish in a barrel
 
the biggest risk to Telkom may not come from Neotel but rather its biggest shareholder, the state
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They certainly not acting particularly worried
 
I agree with IC. As long as Telkom has the benefit of cables into homes there will not be competition until other players get the same benefit.

Neotel will have to compete on price on totally different transit technologies. Hardly a fair playing field, but they will however have to price themselves right...

Things are far from perfect for competition. The best thing would be to totally open the market! COMPLETELY!
 
Agreed, this half-hearted phased de-regulation is just costing too much and delivering absolutely nothing of substance.
Open the market, LLU, scrap ICASA and I'll worry about the fly by nights.
 
IMO the major stumbling block that new fixed line operators will have is the fact that it will take years if not decades to get a fixed line network into place to compete with Telkom.
 
Telkom doesn't look too worried about Neotel. Telkom chief financial officer Kaushik Patel told analysts at a recent investor day that the company expected to lose only 10% of its market share in fixed lines over the next three to five years, down from an earlier forecast of between 10% and 15%

not a nice attitude.. what if 70% of telkoms customers went to neotel??
whats a company without customers? and after messing loads of custmers around lieing, ect i cant them losing alot more than that

"there counting there chickens before the hatch"
 
antowan said:
Things are far from perfect for competition. The best thing would be to totally open the market! COMPLETELY!
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Exactly, but to get to that point, the Grim Poisonous Ivyness Creep and her [mis]managed [telecoms] liberalisation policies need to be removed, and then we need Local Loop Unbundling to pave the way for new wired competition, and right now the odds against any one of these 3 things happening are staggering.
 
DOOMIE61 said:
not a nice attitude.. what if 70% of telkoms customers went to neotel??
whats a company without customers? and after messing loads of custmers around lieing, ect i cant them losing alot more than that

"there counting there chickens before the hatch"
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The truth is that Telkom does not care a hoot about the average home user. The income per line is not that great. On top of this, how many "standard issue" people will take the trouble to change bank/cellphone provider/internet provider/doctor/dentist due to bad or expensive service? It is most probably less than 10% of the population. Telkom is very safe!

Telkom cares about the 10 000 or so top corporates and has long term exclusive deals with SLA's in place with them. They are the big customers with the big budgets that makes Telkom the big profits.

The only reason they are interested to service smaller clients is because the big clients have to be able to call somewhere. Telkom will gladly transfer all households to Neotel and rake in the internetwork connection fees for much less hassles.
 
Much of this article is probably an accurate analysis. Certainly, Telkom doesn't appear to be particularly worried (at least, those who are left at Telkom, and haven't already jumped ship).

The one statement that is probably not correct is "Telkom's investors, who have seen the value of their investment increase sixfold since it listed in 2002, do not need to panic. Neotel has a long way to go before it poses a threat to Telkom's core revenues."

Telkom has certainly consolidated its position over the last couple of years, fuelled by a lack of competition on almost every front. Right now, with disarray in its management, its inability to move its core revenues away from voice, and (believe it or not) signs of various competitive threats to some of its most lucrative revenue streams, this is precisely when its investors should worry. In a word, "Sell" :eek:

It's going to take a very skilled management team to make the right (probably tough) decisions to get Telkom on an even keel for the long term. Unfortunately, there seems to be little sign of this, particuarly when you consider who controls the board.
 
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Much of this article is probably an accurate analysis. Certainly, Telkom doesn't appear to be particularly worried (at least, those who are left at Telkom, and haven't already jumped ship).

The one statement that is probably not correct is "Telkom's investors, who have seen the value of their investment increase sixfold since it listed in 2002, do not need to panic. Neotel has a long way to go before it poses a threat to Telkom's core revenues."

Telkom has certainly consolidated its position over the last couple of years, fuelled by a lack of competition on almost every front. Right now, with disarray in its management, its inability to move its core revenues away from voice, and (believe it or not) signs of various competitive threats to some of its most lucrative revenue streams, this is precisely when its investors should worry. In a word, "Sell" :eek:

It's going to take a very skilled management team to make the right (probably tough) decisions to get Telkom on an even keel for the long term. Unfortunately, there seems to be little sign of this, particuarly when you consider who controls the board.
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While I tend to agree with you, IMO what should worry shareholders the most, is the fact that Telkodemonopolies has an absolutely pathetic wired line penetration rate, and for a company that is still the de facto wired line monopoly in SA, this surely has to be the most telling sign of corporate incompetence.
 
Should 70% or more of Hellskommels' customers defect then I'll pop down to the local and buy a six pack of Castle to celebrate :D

No Ivy donuts for me tho... it's too far away and they're likely to be gone long before I arrive... :p :D
 
sky.akash said:
IMO the major stumbling block that new fixed line operators will have is the fact that it will take years if not decades to get a fixed line network into place to compete with Telkom.
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Agreed and the incompetent minister and ICASA is making it more difficult for Notel...
 
The real threat to Telkom is if the mnets, banks or insurance giants of this world move. It would only take a dozen of the top players to severly hurt Telkom's bottom line. Unfortunately, these same players are the most conservative, so while they will buy Neotel bandwidth as a look and see, I doubt if they will move all the eggs at the same time.

Of course, if the government encourages itself, with all its provinces and municipalities to move, then that would also be interesting.
 
bekdik said:
The real threat to Telkom is if the mnets, banks or insurance giants of this world move. It would only take a dozen of the top players to severly hurt Telkom's bottom line. Unfortunately, these same players are the most conservative, so while they will buy Neotel bandwidth as a look and see, I doubt if they will move all the eggs at the same time.

Of course, if the government encourages itself, with all its provinces and municipalities to move, then that would also be interesting.
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But the government is in a conflict of interest situation: wanting cheaper telecomms prices but being part owners of Telkom:rolleyes:
 
I find both sides (NeoTel and Telkom) just too complacent.

One would think that a newly established telecoms company, trying to break into a monopolised market, would be far more aggressive in their marketing and strategy. The fact that this is not happening is a bit worrying. It leads me to believe that there must be some kind of "behind the scene" agreements in place, some kind of trade off to keep the public happy (look here is the competition that you asked for) and to let it be seen that legislation is being followed.

Especially now that Telkom has suddenly jumped into action with their "wimax trials". Again the illusion of competition is strengthened. Where a possible deal might have been in the order of: NeoTel gets to profit on the home wireless front, whilst Telkom profits from fixed line. So they do not have comparable products to compete with, therefore no price war and no price reduction.

Telkom makes money from fixed line, NeoTel from wireless. Both roll in profits and the public once again gets screwed.
 
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