Telkom makes big cut to fibre rollout spending

Telkom nearly halved its spending on fibre expansion through its network wholesale division Openserve during the last financial year.

According to the group’s results for the year ended March 2020, capital expenditure on fibre was R703 million, 42.2% less than the previous year’s R1.2 billion.

The company stated the lower investment was rationalised as part of a focus on areas showing a propensity for higher connectivity rates.

Although it was able to increase its number of active fibre connections, this was not enough to counteract a substantial loss of its overall fixed-line subscribers, which declined from 2,267,000 in March 2019 to 1,602,000 in March 2020.

Despite its drastic decline in overall fixed-line subscriber numbers, Telkom said it has improved its FTTH connectivity rate from to 38.4% to 48.2%.

This means just under half of the households located in areas with coverage from Openserve’s fibre network currently have an active line.

The company has previously said it will refocus its overall strategy to grow its mobile business.

This focus is clear in its latest results, with capital investment on its mobile business increasing by 22.1% to R3.7 billion.

The mobile investment made up more than 47% of the group’s total capital expenditure for the 2020 financial year.

“The accelerated investment was to support growth in the mobile business and to prepare for the accelerated migration of customers to LTE/LTE-A and fibre,” the company said.

It claimed it was seeing good returns on this investment, with mobile service revenue increasing by 54.4%.

Competitors

Openserve’s main rivals, South Africa’s two largest privately-owned fibre infrastructure providers, have shown the potential for significant long-term growth.

Vumatel and DFA, which are both owned by CIVH, recently secured a R16-billion senior debt financing package to assist with the expansion of their networks.

Combined, the operators currently boast a 29,300km fibre network that passes 690,000 premises and connects 11,500 mobile base stations and 240,000 homes and businesses.

By comparison, the Openserve network has passed approximately 455,600 homes, with fibre connections to base stations at 7,704.

Now read: Telkom earnings plummet despite mobile growth

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Telkom makes big cut to fibre rollout spending