Landline users hang up
As Telkom’s price increases take effect consumers are growing increasingly impatient and are terminating their services with the operator in droves.
In 2006 the company lost almost 20000 customers, as Telkom experienced a steady decline in landline connections.
Last year more than 60000 lines were disconnected by Telkom. The decline was not reflected in the company’s results for the year ending March 31 this year.
Telkom recorded a marginal operating revenue increase of 0.7%, with the help of mobile operator Vodacom and a number of other acquisitions.
The company has recently received approval from the Independent Communication Authority of South Africa (Icasa) to increase its basic prices for telephone calls. In today’s climate of increased spending pressure on consumers, this move is destined to alienate subscribers even further.
Arthur Goldstuck, director of research firm World Wide Worx, said: “Apart from long distance calls, Telkom has never decreased its prices.
“The only reason (long distance prices were unchanged this year) was that it’s in competition with every VoIP (Voice over Internet Protocol), call back and cellular service out there.”
A few long distance call destinations have been decreased marginally. This was mainly in response to the rise in web based VoIP services such as Skype, where users can make calls at almost no charge.
Ina Wilken, South African National Consumers’ Union vice-chairperson, said: “Telkom needs to be careful. They need to nurture customers so that when real competition enters the market it will be able to hold on to them.”
While Telkom is focusing on acquisitions and landing corporate clients, it has alienated home subscribers.
Thami Bolani, chairman of the National Consumer Forum said: “In our understanding, there isn’t any competition in the sector, that’s why Telkom has been providing a poor service. These price increases are not good for small business development, especially when you compare them with prices overseas where they are very cheap,” Bolani said.
It will be at least a year before customers at home are able to make calls over a fixed cable Neotel network, but they can access the company’s “fixed-wireless” service which is up and running.
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