Telkom is hurting

Telkom has released its interim financial results for the six months ended 30 September 2018, which shows a big loss in fixed broadband subscribers.

Telkom’s fixed broadband subscribers declined from 999,311 in September 2017 to 974,181 in September 2018 – a year-on-year decline of 2.5%.

While this decline may not seem significant, it is a concerning trend which Telkom has not been able to stop since 2016.

Until 2016, Telkom always grew its fixed broadband subscriber numbers, thanks to the growing demand for faster broadband services and higher usage limits.

There was, however, a big change in the South African fixed broadband industry in 2016 – independent fibre network operators started to gain traction.

Many fibre operators started to roll out fibre networks between 2014 and 2016, which provided DSL subscribers with faster and more affordable fibre-to-the-home services.

Where Telkom previously had a monopoly on fixed-line broadband access through its copper network, this all changed with fibre.

While Openserve is a big player in the fibre-to-the-home market, it is not nearly as dominant as it used to be with DSL.

Telkom fixed broadband decline

Fibre-to-the-home has shown exceptional growth since Vumatel started to roll out its first network in Parkhurst in 2014.

According to Africa Analysis, the fibre industry passed approximately 30,000 units in 2014. By 2018, it has passed 1.1 million units.

To add to Telkom’s woes, Rain and Cell C also started to offer affordable fixed-LTE products as an ADSL alternative.

The table below shows Telkom’s fixed broadband subscriber numbers over the past 15 years.

Telkom Fixed Broadband Subscribers
Date Subscribers Monthly growth
Mar-03 2,669 0
Sep-03 12,000 1,555
Mar-04 20,313 1,386
Sep-04 37,000 2,781
Mar-05 58,278 3,546
Sep-05 95,920 6,274
Mar-06 143,509 7,932
Sep-06 190,172 7,777
Mar-07 255,633 10,910
Sep-07 335,112 13,247
Mar-08 412,190 12,846
Sep-08 491,774 13,264
Mar-09 548,015 9,374
Sep-09 602,720 9,118
Mar-10 647,462 7,457
Sep-10 699,368 8,651
Mar-11 751,625 8,710
Sep-11 795,419 7,299
Mar-12 827,091 5,279
Sep-12 841,831 2,457
Mar-13 870,505 4,779
Sep-13 898,203 4,616
Mar-14 926,944 4,790
Sep-14 971,319 7,396
Mar-15 1,005,286 5,661
Sep-15 1,015,307 1,670
Mar-16 1,027,507 2,033
Sep-16 1,018,405 -1,517
Mar-17 1,003,521 -2,481
Sep-17 999,311 -702
Mar-18 981,176 -3,023
Sep-18 974,181 -1,166

Big Telkom fixed-line decline

Another big problem for Telkom is its rapid decline in fixed-line subscribers.

Telkom now has 2,566,000 fixed-line subscribers, down from 2,840,000 a year ago. This is a year-on-year decline of 274,000 lines.

If you consider that Telkom’s fixed-line subscribers peaked at 5,493,000 in 2000, it paints a picture of a company which is struggling to hold on to its customers.

When a person cancels their Telkom line, it means that the company cannot provide them with ADSL or voice products.

Unsurprisingly, total fixed-line voice traffic showed a huge decline over the last year – down from 6,449 million minutes in six months in 2017 to 5,630 million minutes in six months in 2018.

An equally big concern for Telkom is the challenge to win back customers after they have migrated to a fibre-to-the-home service. This is a very difficult task.

The table below should therefore be scary reading to any Telkom executive who wants to improve the company’s fortunes in the fixed broadband market.

Telkom Fixed Lines
Date Subscribers YoY Change 6-Months Change
1993 3,458,000
1994 3,594,000 136,000
1995 3,773,000 179,000
1996 3,926,000 153,000
1997 4,259,000 333,000
1998 4,645,000 386,000
1999 5,075,000 430,000
2000 5,493,000 418,000
2001 4,962,000 -531,000
Mar-02 4,924,000 -38,000
Mar-03 4,844,000 -80,000
Sep-03 4,812,000 -32,000
Mar-04 4,821,000 -23,000 9,000
Sep-04 4,870,000 58,000 49,000
Mar-05 4,726,000 -95,000 -144,000
Sep-05 4,730,000 -140,000 4,000
Mar-06 4,708,000 -18,000 -22,000
Sep-06 4,675,000 -55,000 -33,000
Mar-07 4,642,000 -66,000 -33,000
Sep-07 4,621,000 -54,000 -21,000
Mar-08 4,532,000 -110,000 -89,000
Sep-08 4,504,000 -117,000 -28,000
Mar-09 4,451,000 -81,000 -53,000
Sep-09 4,398,000 -106,000 -53,000
Mar-10 4,273,000 -178,000 -125,000
Sep-10 4,234,000 -164,000 -39,000
Mar-11 4,152,000 -121,000 -82,000
Sep-11 4,073,000 -161,000 -79,000
Mar-12 3,995,000 -157,000 -78,000
Sep-12 3,894,000 -179,000 -101,000
Mar-13 3,800,000 -195,000 -94,000
Sep-13 3,713,000 -181,000 -87,000
Mar-14 3,618,000 -182,000 -95,000
Sep-14 3,531,000 -182,000 -87,000
Mar-15 3,439,000 -179,000 -92,000
Sep-15 3,323,000 -208,000 -116,000
Mar-16 3,217,000 -222,000 -106,000
Sep-16 3,090,000 -233,000 -127,000
Mar-17 2,954,000 -263,000 -136,000
Sep-17 2,840,000 -250,000 -114,000
Mar-18 2,678,000 -276,000 -162,000
Sep-18 2,566,000 -274,000 -112,000

Now read: Big Telkom fixed-line and ADSL shock

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Telkom is hurting