Has Telkom passed its crossroads?
Telkom has left Vodacom behind, which many analysts regarded as Telkom’s annual results saviour. The company has also rid itself of Telkom Media. Is this all part of creating a new Telkom? (I have often wondered why Telkom became involved in media and content when there were so many other more profitable challenges. I guess we will never know!)
The question now is whether Telkom has taken the proverbial high road or will it continue on a straight and narrow path?
Can Telkom still defend its voice component as a profit-generating service? Is there growth in voice? CEO Reuben September believes so. “Our growth strategies focus ons adding revenue by developing a fixed-mobile capability to give us a larger share of the voice revenue pie, aggressively building our data, broadband and converged services offering and expanding geographically into high growth markets.
“However, with regard to voice revenue, Telkom’s traffic revenue decreased by 3,9%. This is primarily due to continuing fixed to mobile substitution. Revenue from subscription-based calling plans increased by 20,5%.
“The Telkom Closer packages have performed well, increasing by 27,6%. Supreme Call packages, mainly targeted at the business segment, have increased by 14,4% and PC bundles have increased by 48,3%.
“This shows that our defend and grow strategies are on track. In addition, bundled products represent an important strategy for delivering greater value to our customers. It is vital for Telkom to explore all avenues that will provide us with growth and migrate traffic back on to our network,” said September.
Telkom’s Africa strategy has not been something to shout about. In his annual report briefing September indicated that to date. Telkom’s initiatives in Africa have been challenging, given the high start-up costs, unknown and competitive markets, infrastructure and technology challenges, skills requirements and volatile currency and interest rate markets.
“The financial impact of this on our results is clearly visible in the impairments, foreign exchange losses and negative fair value effects we have had to recognise in the year. We believe Telkom is, however, well positioned to capitalise on these opportunities in Africa,” said September.
Converged services seem to be the flavour of the year. Telkom’s opposition Neotel has changed its slogan from the second network operator to the first converged services operator. In many ways it was a Telkom strategy, a component that was not much talked about. September is now quick to point out that by actively moving up the value-added IT services chain, Telkom has positioned itself perfectly to deliver a true converged services value proposition. It is following the lead of global players such as Deutsche Telekom and British Telecom who hold third and fifth positions respectively in the European IT outsourcing market.
Now that Telkom has the opportunity to enter the mobile market in South Africa, September explained that the company was in the process of conducting comprehensive mobile market research to establish exactly how it can maximise the opportunity at minimal operational and build cost.
“We believe that Telkom is able to take advantage of our next generation network and that newer technologies will give us an advantage over the current mobile operators in terms of our ability to carry increased traffic, provide superior quality and to compete,” said September.
The aim of Telkom’s geographic expansion strategy is to establish itself as a regional voice and data player through the provisioning of a range of hosting services, managed solutions, mobile voice and wireless broadband services. To date, Telkom has invested in Multi-Links, Africa Online and M-Web Africa. It has also signed a memorandum of understanding with the USA’s AT&T.
In the past, unfair allegations were often levelled at Telkom. However, if during its exclusivity days it had not developed its national infrastructure, South Africa’s telecommunications would have been far worse. The strength of Telkom’s network has been tangibly demonstrated by several clients, including FIFA. It will provide FIFA’s data centre hosting requirements and fully managed customised IT solutions. Recently Telkom successfully beamed the Confederations Cup 2009 to billions of people across the globe.
The deployment of the infrastructure and services at the ten stadiums and International Broadcasting Centre is being funded through a contract entered into with the Department of Communications (DoC). The funding received from the DoC totals R950-million over the 2009 and 2010 financial years. Telkom has spent R118-million during the year ended 31 March 2009. The DoC funding does not cover certain increases in the national backbone and transmission networks, management operating systems and network synchronisation requirements.
Revenue will be generated directly from FIFA, the media and broadcasters. “We anticipate that this investment will comfortably meet our investment criteria. In the future, it is envisaged that Telkom will be able to redeploy a substantial portion of the infrastructure provided at the stadiums throughout the network, apart from the access equipment. In addition, the expansion in the core network will be utilised for South Africa’s growing bandwidth demand,” said September.
Perhaps Telkom is after all taking the high road! And perhaps after 2010 ADSL users will get faster connections to enjoy true broadband.
Telkom’s future plans – what sould Telkom do?
EngineerIT
Loading ...