Telkom’s latest interim financial results have revealed that ADSL is all but dead in South Africa.
Between September 2022 and September 2023, Telkom’s wholesale fixed-network division Openserve saw its fixed broadband subscribers decline by 1.3% — from 562,080 to 554,809.
Although the telecoms company does not break down its precise number of DSL customers, this figure can be calculated by subtracting the number of fibre customers from its total fixed broadband customer base.
Homes connected with Openserve fibre jumped from 443,469 by the end of September 2022 to 542,598 a year later — an increase of 22.4%.
Subtracting the latest number from Telkom’s 554,809 broadband customers leaves just 12,211 customers not using fibre as their fixed broadband connection.
That is a massive decline of nearly 84% from the 74,477 DSL customers Telkom had at the end of September 2022.
The 12,211 customers now account for just 2.2% of Telkom’s total fixed broadband customer base.
The graph below shows how Telkom’s DSL customers declined and fibre-to-the-home (FTTH) customers increased from 2016.
2016 had the highest number of DSL customers at any point in the technology’s history and was the first year Telkom started reporting home fibre subscribers.
Telkom has been actively decommissioning the copper network that supports its DSL services and migrating customers to FTTH and fixed-LTE services over the past few years.
Fibre is vastly superior to copper in speed, bandwidth, and reliability. It also has little to no street value, meaning it is not an attractive target for copper thieves.
Telkom had a legally supported monopoly in DSL connectivity in South Africa — with around 1 million customers using the technology to access the Internet at the peak of its adoption.
However, it failed to leverage its extensive infrastructure advantage to modernise its network and keep pace with Vumatel and other fibre infrastructure upstarts.
Vumatel grew from a startup in 2014 — when Telkom already had hundreds of thousands of DSL customers — to South Africa’s biggest FTTH provider.
Although customers disgruntled with Telkom’s history of high prices and poor service contributed to its subscriber decline, the company also repeatedly switched between its fixed and mobile divisions as focus areas for its capital expenditure.
Industry experts argued that Telkom’s intention to become a bigger mobile player was misguided, as it had to cover significant ground to reach anywhere near the network coverage of the two biggest operators — Vodacom and MTN.
Openserve fibre grows — but still behind Vumatel
Telkom’s latest interim results show that Openserve has upped its number of homes passed with fibre from 960,801 to 1,158,761 — an increase of 20.6%.
Nevertheless, the company is still in second place when it comes to network coverage, with Vumatel having passed over 2 million homes by May 2023.
However, Openserve is not as far behind Vumatel when it comes to households that actually use their networks.
Vumatel had about 600,000 connected of the 1.805 million households covered by its network as of December 2022.
Assuming it continued to add customers at its connectivity ratio of 33.2%, it would have had about 665,000 by May 2023, compared to the 542,598 Telkom posted by September 2023.
Openserve has the highest connectivity ratio of any major open-access fibre network in South Africa, with around 46.8% of households covered by its network taking up its fibre service.
This potentially allows Telkom to achieve a greater return on investment with Openserve than its rivals.
But Telkom is also hurting when it comes to one of its previous big revenue drivers.
The results show that Telkom’s total fixed access lines — which includes those used only for voice services — have dropped from 882,000 in September 2022 to 690,000 in September 2023. That compares with a peak of 5.49 million at the end of March 2000.
The graph below shows how Telkom’s total fixed subscribers declined between 2016 and 2023.