Telkom’s fixed line pain

During the presentation of its annual results, Telkom tried to dress up its fixed-line numbers so it looked like the ailing business segment was performing well. However, this is far from the truth.

Telkom’s annual results show that the company’s fixed-line business freefall continued unabated despite the substantial growth it has recorded in fibre connections.

While the number of Telkom fixed access lines has consistently declined since March 2000, the slow bleed turned into a nosedive in March 2019 when it began posting double-digit decreases.

These drops have been 20% or higher for the past five years.

It’s a similar story when looking at Telkom’s figures for its number of fixed broadband subscribers, which peaked in March 2016 and have been declining ever since.

These decreases are despite Telkom’s wholesale and networks division, Openserve, showing substantial growth in the number of homes passed and connected with fibre.

During its last financial year, which ended on 31 March 2023, Telkom reported 17% growth in the number of homes its fibre network passes, and a nearly 20% increase in the number of homes connected.

At the same time, its fixed broadband subscriber base declined by 2.2%, while the number of fixed access lines dropped by 23.2%.

The decline is also reflected in Telkom’s fixed-line revenues, which dropped another 5.7% during the past year — from R14.3 billion to R13.5 billion.

This was despite a 14.5% rise in next-generation fibre connectivity revenue from R4.9 billion to R5.6 billion.

Simply put, Telkom could not add new fibre customers fast enough to offset its plummeting traditional copper phone line business.

It has also been unable to increase data revenues faster than income from traditional voice services dropped.

Despite the decrease in fixed access lines and fixed broadband subscribers, Telkom has tried to paint a picture of a growing fixed-line broadband business in its results presentation.

The company introduced a new performance metric called “Fixed line broadband services”, which shows double-digit growth during the past financial year.

The table below summarises these five key operational data points that Telkom reported in its most recent results.

Telkom’s new “fixed line broadband services” numbers

MyBroadband contacted Telkom for comment on how its “Fixed line broadband services” figure relates to its regular “Fixed access lines” and “Fixed broadband subscriber” numbers, but it did not respond by publication.

Even factoring in that 10% of the “fixed line broadband services” number is legacy access, that still leaves around 646,200 for fibre access.

This is 55,673 higher than Telkom’s number for homes passed and connected. This difference potentially reflects the number of business customers on Openserve’s fibre network.

Telkom previously told MyBroadband that its fixed broadband subscriber figure includes customers on rival fibre networks like Vumatel, MetroFibre, and Frogfoot.

It also said that it reports its homes connected figure according to the European FTTH Council’s standard.

It considers any household with an optical network terminal installed as a home that is connected to its network.

As long as no further equipment installation is required, the household is counted as “home connected”, regardless of whether it has an active FTTH subscription.

This means the number of active fibre customers on Openserve’s network is likely lower, as not all households with a fibre drop are necessarily using the network.

An interesting figure that emerged from Telkom’s new “Fixed line broadband services” number is the legacy access portion, which appears to correspond with the company’s declining DSL subscriber base.

Telkom stopped reporting its DSL numbers separately in its 2016 annual report and, until recently, its last officially confirmed figure was 1,004,705 on 30 September 2015.

This coincided with Telkom’s fixed broadband subscriber base beginning to decline, as well as Vumatel and several other fibre network operators expanding their fibre infrastructure to provide an alternative to DSL.

Telkom’s refusal to publish ADSL figures meant the number had to be estimated from the information Telkom was willing to share.

More than eight years after it stopped reporting its DSL subscribers, Telkom revealed in its December 2023 quarterly update that it still had around 82,000 of these legacy services active on its old copper network.

The rise and fall of Telkom DSL is summarised in the chart below.