Slow death of ADSL in South Africa

Telkom has only around 43,700 customers connected to its copper-based digital subscriber line (DSL) network, having fallen from a peak of more than one million subscribers in 2015 and 2016.

Telkom’s interim financial results for the six months ended 30 September 2024 revealed the current number of subscribers.

ADSL penetration in the country peaked in early 2016 when the network operator reported having 1,011,120 subscribers connected to its copper-based network.

However, Telkom effectively benefited from a legalised monopoly on fixed communications infrastructure. It was the only company that could install and manage copper networks supporting DSL and telecommunication in South Africa.

South Africans could use third-party Internet service providers (ISPs) instead of Telkom, but everyone depended on the partially state-owned company for the physical network infrastructure.

Telkom also exploited its monopoly to make it difficult for ISPs to compete with it on pricing.

Despite the Competition Tribunal instructing Telkom’s wholesale network business to be separated from its retail segment, ISPs still complained that Telkom’s retail business sold products that were not available to them.

However, Telkom’s stranglehold began to break with the rollout of affordable uncapped DSL products from Mweb in 2010 and, ultimately, Vumatel’s 2014 fibre-to-the-home rollout in Parkhurst.

Not long after, the network operator stopped reporting on its ADSL subscriber numbers for several years.

The last officially confirmed number of DSL customers it had was 1,011,120 by 30 March 2016, and the industry was forced to speculate about its decline thereafter.

However, its ADSL subscriber numbers over the years could be estimated by subtracting the number of homes connected to fibre from its total fixed broadband subscribers.

Over the next four years, Telkom’s DSL subscriber numbers decreased by more than 500,000, and by June 2021, DSL connections nearly halved again to just over 264,000.

Telkom officially reported on DSL subscriber numbers again in December 2023, when it revealed that it still had 82,000 customers connected to its copper network.

In its annual results presentation for the year ended March 2024, Telkom revealed that only around 10% of its fixed broadband lines were still DSL, working out to around 71,800 subscribers.

In its latest interim results, released on 18 November 2024, Telkom revealed that DSL subscriber numbers had declined to 43,965 during the six months ended 30 September 2024.

This represents a decline of roughly 96% since March 2016.

The chart below shows the rise and fall of Telkom ADSL subscriber numbers from 31 March 2003 to 30 September 2024.

Goodbye DSL, hello fibre

The uptake of fibre in South Africa, offering higher speeds at lower prices, has significantly contributed to Telkom’s DSL subscriber decline.

In August 2024, FTTH penetration among the country’s nine most prominent FNOs was estimated to be around two million households, more than double Telkom’s peak ADSL customer base.

While Telkom increased its fibre rollouts and cut prices when it became clear that Vumatel and its peers were becoming significant competitors, it hasn’t been enough to offset DSL subscriber losses.

For reference, its latest fixed broadband lines figure is around 553,000 and includes both DSL and fibre subscribers. The figure is nearly 460,000 less than the peak in March 2016, when it only included DSL lines.

By 31 March 2016, Telkom’s wholesale broadband division, Openserve, had only connected around 8,130 homes to its fibre network.

Telkom’s rapid rollout resulted in this figure growing significantly over the next five years, reaching nearly 300,000 homes connected in March 2021.

Openserve has continued with its fibre rollouts since. As of 30 September 2024, it had passed nearly 1.3 million homes with its fibre network and connected around 641,000.

This represents a connectivity rate of roughly 49.7%.

However, it should be noted that Telkom reports its homes connected figure according to the FTTH Council in Europe’s standard, which only requires an installed optic network terminal.

The home doesn’t have to have an active subscription for it to be considered connected.