ADSL price cuts to be announced?
On Tuesday Telkom will release its annual results for the year ending 31 March 2009. While analysts will be keen to assess the fixed line provider’s performance after shedding its 50% stake in Vodacom, many consumers are far more interested in a potential announcement about ADSL price cuts.
Telkom generally uses its annual results presentation to announce ADSL price cuts. In June 2005 Telkom announced a second ADSL price reduction for the year after the company decreased prices by 12% in March 2005.
In June 2006 Telkom announced average ADSL access cost cuts of 24%, and followed this up with further ADSL price cuts in August 2007 which saw the introduction of a R 199 ADSL bundle. This was the first sub-R 200 ADSL bundle in the South African market.
Telkom broke tradition in 2008, and left ADSL prices unchanged. According to World Wide Worx Managing Director Arthur Goldstuck the uncertainty in the broadband market at the time gave Telkom the freedom to ignore the issue of ADSL pricing.
There are however widespread expectations that Telkom will continue with tradition in 2009 and announce ADSL price cuts at this year’s annual results presentation. A more competitive broadband market, Seacom’s switch on and Telkom’s strong broadband focus are all factors pointing to more aggressive ADSL pricing.
Telkom CEO Reuben September recently said that he would like Telkom to be known as the leading broadband provider in South Africa. This is however a title which Vodacom is currently claiming, and more aggressive ADSL pricing will be needed to make the service more competitive in the local broadband market.
Goldstuck says that he expects ADSL price reductions from Telkom, but cautioned that the company may opt to increase the overall ADSL bundle value proposition through higher monthly usage limits or higher speeds rather than simply reducing the monthly cost.
Goldstuck added that Telkom should consider making a 1 Mbps ADSL their standard broadband offering since many consumers now associate broadband access with speeds of at least 1 Mbps. Goldstuck further said that he hopes that Telkom will give a clear road map of its future plans in the ADSL market.
ADSL price cuts – give your views
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