Telkom sells fixed lines below cost

Another delegate questioned Telkom’s accounting methods, citing the company’s SAT-3/SAFE cable costing where Telkom used a five year period to recover costs despite the fact that the cable’s life span was expected to be a minimum of 25 years.

/lol

This delegate, I like :D
 
According to Coetzee, the actual cost of providing a subscriber with a fixed line is well above R250

Ok, so how can they provide prepaid Waya-waya lines at R140 per year?
 
the actual cost of providing a subscriber with a fixed line is well above R250.
Well I pay

R111.90 at home and R148.68 at the office for JUST THE ANALOG PORTION
Add to that
R413 for 4Mbps DSL and I'm looking at:

R524.90 at home and R561.68 at the office
I'm sure that qualifies as WELL ABOVE COST!!!
What a load of cods.

Ok, so how can they provide prepaid Waya-waya lines at R140 per year?
Cos telkom cross subsidise them. I am paying for their service.

/lol

This delegate, I like :D
Precicely. You get accountancy and Telkom accountancy. Since they write off SAT3 over 5 years, let's hear their master plan for the replacement... Oh wait...
 
Last edited:
Telkom's rhetoric sounds more like propaganda and less like logic. Digging their heels in. Deepening and widening the trenches. Fail.
 
well above R250?.... per what?.. year? month?.. day?

And cross subsidization of this from voice rentals? (I will assume all lines are residential in nature because I don't know the actual split between business and residential)
This means their access network is running at a deficit of at least 4.2m x R110 (diff between R250 and the line rental) so thats roughly R462m...

I'm going to assume that the R250 is per month, so that works out to a figure of R462m x 12 = R5.54bn per year...

They made R13.47bn revenue from Voice last year, which means nearly half that amount is being paid straight back into their access devision purely to cover the access deficit.

I'm sorry, but that just smells BEYOND fishy to me in terms of accounting..... no business would happily be running THAT level of cross subsidisation from a product that is slowly but surely seeing its revenues being eaten into by newer technologies run by competitors.

Voice revenues WILL see a decrease year on year in my opinion PURELY due to the fixed nature of the Telkom telephone. I would rather have access to my phone wherever I am, and I now no longer let anyone know what my Telkom number is.. and I don't even have a phone plugged into the line.
 
Telkom sounds like a fat pig squealing blue murder while it's made to run on a treadmill to shed some of that excess.

Their bottom line does not seem to indicate a loss of anything.
 
Telkom... what a load of BS, sounds like a married man who's just been caught cheating by the wife... any excuse will do... but the truth...

So happy not to be a customer of their monopoly! The long Telkom fight LLU, the more irrelevant their network will become!
 
Also digging a little bit INTO the Year End report.... these are the expenses I can pick up that I reckon would have something to do with the "last mile" network

Employee Expenses (7,977m).. I reckon its say to say 20% of that is for their Access network
Selling, general and administrative expenses (3,443m) of which only the Materials and maintenance (1,843m)aspect is applicable and even then I reckon 50% of that counts.
Service fees (3,333m) and I would assume generously that 35% of that applies
Operating leases (647m) and of that.. maybe 20% applies....

So to add that up...
Employee Expenses 1595.4m
Materials and maintenance 921.5m
Service fees 1166.55m
Operating Leases 129.4m

Overall that is 3812.85m... FAR short of their access deficit figure (even the value they're apparently LOSING every year)
 
Since I'm going to harp on about costs.. to a degree.. how exactly do Telkom find a black hole to hide a division that is costing them roughly R12.6bn per year in their annual figures?

That means year on year, their last mile network is costing more than a third of their ENTIRE operating expenses as a group?.. that doesn't seem right to me at all.
 
The day Telkom listed on the JSE was probably the last day that tax payers paid for the Telkom network. From that day on every bit that was spent came from a listed company (from revenue and profits). Exchanges were added, mini DSLAMs in those street corner boxes were added. Miles and miles of fibre was added, not to mention the backend servers that run an IP network. Salaries were paid to continuelly maintain the network, replace stolen cable etc... I agree that to a certain degree LLU sounds good because we want it to mean cheaper broadband. Perhaps an audit should be done to say what percentage of the network was paid for by tax payers and that should be unbundled. But that won't make much sense as it would be to complicated. Also, after unbundling, who will maintain the network or pay for stolen cables? If you remove emotion from LLU, it will probably be better to leave it status quo. That way Telkom can continue to invest in the access network, especially in new areas without cable, coz lets face it, LLU is still a hot topic becuase mobile data is not up to scratch and expensive, otherwise if it was better than fixed line, why would they bother? (Vodacom and MTN were granted years of exclusivity before and thrid and then a fourth licence were granted -- billions in profit. Maybe access to their networks would also help bring down price)
 
Nobody (who has a brain) is saying Telkom HAVEN'T invested in their network since they went Public... but , in this thread at least, what people are saying is BS to their claim that their Access deficit is over R100... that is an insane figure, and one that doesn't seem to be played out in their Year End Results like one would expect from such a large loss making division.
 
Something is not adding up here, sounds like Telkom is trying to make excuses.
 
Top
Sign up to the MyBroadband newsletter
X