Telkom bleeding fixed broadband subscribers

Telkom has released a market update for the nine months ended 31 December 2020, which shows a big decline in fixed broadband subscribers.

Telkom’s fixed broadband subscribers include ADSL, VDSL, and fibre-to-the-home (FTTH) lines.

The company revealed its number of fixed broadband subscribers declined from 738,840 on 31 December 2019 to 617,047 on 31 December 2020.

Telkom used to dominate the South African fixed broadband market and the rapid decline in DSL and fibre lines should concern the company.

One consolation is that Telkom showed strong growth in its mobile broadband subscriber base, which increased from 7.9 million on 31 December 2019 to 10.1 million on 31 December 2020.

Telkom is clearly focussing on its mobile operations to the detriment of its fixed broadband business, but it is still talking up its plans in the fibre market.

The company said it saw an increase in demand for fixed connectivity which resulted in an improved FTTH connectivity of 56.7% compared to 46.6% in the prior period.

What this means, in simple terms, is that there is such a strong demand for fibre that more than 50% of households in an area where Telkom has fibre coverage subscribe to the service.

Fixed broadband traffic also increased from 836 petabytes to 1,071 petabytes over the reporting period.

With this strong demand for data, one would have expected Telkom to grow its fixed broadband subscriber numbers. There is, however, a problem – coverage.

Fibre network operators like Vumatel and Frogfoot are eating Telkom’s lunch in the fibre market and it is struggling to remain competitive.

Over the past few years, there has been a land grab in the South African fibre market and smaller operators can roll out networks faster and more affordably than Telkom.

Telkom is still rolling out fibre in some areas, albeit much slower than previously. Over the reporting period, Telkom passed 25,000 new homes as part of its fibre expansion drive.

Telkom is therefore not abandoning the fixed broadband market, but it is not investing enough to make it a growth area in future.

It is strange to see Telkom happily looking on as Vumatel, Frogfoot, and Octotel decimate its fixed broadband market share, but it may speak to what Telkom sees itself becoming in future – a strong player in the mobile market.

The rise and fall of Telkom’s fixed broadband subscribers

Telkom launched its first ADSL trial in Gauteng in August 2002 and started its national rollout in March 2003.

The strong demand for high-speed Internet access means ADSL was an instant hit. Businesses and residential customers flocked to Telkom which fuelled growth for over a decade.

Telkom’s fixed broadband subscriber base peaked in March 2016 with just over 1 million ADSL and fibre lines.

Two things happened since then – technology enhancements allowed mobile operators to launch affordable fixed-LTE products and Telkom faced competition from fibre providers.

One of the company’s biggest mistakes was allowing companies like Vumatel and Frogfoot to get a foot in the door.

Telkom has conduits and copper lines in most neighbourhoods and an existing box in most homes, giving it a big advantage over new fibre players which had to trench to roll out infrastructure.

Telkom did not make the most of this advantage and was, in fact, late to the fibre game. By dragging its feet on residential fibre network rollouts, it allowed companies like Vumatel to beat it at its own game and kick Telkom out of many neighbourhoods.

The result is clearly seen in Telkom’s fixed broadband customers numbers. In 2016 it started to lose DSL subscribers. This migration accelerated and peaked in 2019 with Telkom losing over 20,000 subscribers per month.

Telkom’s decline in fixed broadband subscribers continues to this day, although the number of customers leaving Telkom per month has tapered off.

The charts below show the rise and fall of Telkom’s fixed broadband subscriber numbers since 2003, and how many subscribers it gained or lost per month over this period.

Telkom fixed broadband subscribers

Growth-and-Loss---Telkom

Now read: Major growth for Telkom Mobile

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Telkom bleeding fixed broadband subscribers