Telkom has released its financial results for the year ended 31 March 2020, which revealed the biggest fixed-line decline in history.
Telkom’s fixed-line subscribers declined from 2,267,000 in March 2019 to 1,602,000 in March 2020.
This means Telkom lost 665,000 fixed-line subscribers year-on-year, which equates to a 29% decline in its fixed-access line customer base.
Although the magnitude of the loss is surprising, the continued decline is not unexpected. The company has been losing subscribers since 2000, when its number of fixed-line subscribers peaked at 5,493,000.
The steady decline over the last 20 years happened despite strong demand for ADSL when it was launched in 2002 and the current growth in fibre lines.
Telkom previously explained the decline was caused by competition from mobile services, copper theft, and tough economic conditions.
While this has not changed, Telkom has also started to replace copper with LTE and fibre across South Africa in 2019.
Telkom CEO Sipho Maseko said in May 2019 that the operator planned to stop providing copper-based services altogether by 2024.
He said phasing out copper was needed because maintaining multiple cable network technologies is costly, and expertise on copper networks would dwindle as new technologies continue to grow.
Additionally, the prevalence of copper cable theft and copper cable faults have made it difficult for the company to maintain reliable connectivity to its DSL customers.
The COVID-19 pandemic and lockdown have, however, slowed Telkom’s plan to decommission its copper network.
Telkom’s wholesale arm Openserve said the pandemic has made it evident there is an immediate and urgent need to provide affordable broadband connectivity to home users.
In the short term, the expansion of next-generation access such as fibre will not be sufficient to meet this demand.
“Hence our copper-enabled broadband provides a reliable option as we expand our fibre footprint closer to the home.”
It did, however, add that it will continue its decommissioning strategy in locations where copper is not “economically viable”.
Copper used to rule until fibre, LTE and 5G arrived
For over a decade Telkom’s ADSL was the only game in town for most South Africans who were looking for affordable, uncapped broadband access.
Sentech’s MyWireless and WBS’s iBurst wireless products provided some competition to Telkom in selected areas in the mid-2000s, but ADSL remained the preferred choice.
Things started to chance when Vumatel launched affordable fibre access in Parkhurst in October 2014.
Vumatel showed it was possible to take on and beat Telkom in the fixed-line market, which sparked a fibre revolution in South Africa.
Many other fibre network operators, like Frogfoot, Octotel, Cybersmart, Vodacom, MTN, and SADV, followed Vumatel’s example and started to roll out fibre across the country.
Telkom was on the back foot, and many households and businesses dumped their ADSL line for fibre-to-the-home and fibre-to-the-business.
Improvements in mobile technologies, which made it possible to offer fast and affordable fixed-wireless broadband access, emerged as another big competitor to ADSL.
Over the last few years MTN, Vodacom, Cell C, Telkom, and Rain launched competitively priced fixed-LTE and 5G products.
Telkom even proactively moved many of its ADSL subscribers to its new fixed-LTE products in many areas.
Both fibre and wireless access provide higher speeds at lower prices than ADSL, which means DSL is seen as old and tired technology which should only be used as a last resort.
The effect was a rapid decline in copper lines as ADSL and VDSL subscribers migrated to these new technologies.
Telkom’s fixed-line decline
The table below shows Telkom’s fixed-line growth between 1993 and 2000, and the decline over the last 20 years.
|Telkom Fixed Lines|