Fibre war — Telkom’s Openserve vs Vumatel

Telkom’s wholesale and networks division Openserve has recorded continued growth over the past financial year, the company’s annual results have revealed.

Openserve increased the number of homes passed by its fibre network to 839,691 — 52.7% more than the same time in 2021.

Of those, 389,109 (46%) opted to connect to Openserve’s fibre network.

Telkom CEO Serame Taukobong explained that the growth aligned with the company’s fibre rollout strategy.

“Openserve continued with its growth trajectory in the fibre market, increasing homes passed with fibre by 52.7% and homes connected with fibre by 38.4%,” he said.

“This is in line with its strategy to accelerate the fibre to the home (FTTH) footprint while simultaneously focusing on connecting homes.”

“In the second half of the year, overall fixed broadband customers increased for the first time in several years despite the decline in ADSL customers,” he added.

Comparatively, Vumatel had passed around 1,500,000 homes and connected more than 450,000 as of 13 June 2022.

If Openserve continues its current growth trajectory, it will have passed nearly 1,300,000 homes and connected almost 550,000 by 31 March 2023.

At the same time, Vumatel would have also added significantly to its fibre network.

To overtake Vumatel, Telkom will have to step up Openserve’s fibre investments.

Telkom increased its fibre capital expenditure from R1.1 billion to nearly R2.1 billion in the past year. However, this is still a far cry from Vumatel parent CIVH’s estimated investment of R3.6 billion in its fibre networks.

Taukobong said that Openserve’s growth is helping remedy several years of diminished revenue.

“Openserve stabilisation path continues and is well underway in turning around several years of revenue declines,” he said.

“The Openserve business evolved as customers migrated from legacy to next-generation over the years.”

“In the period under review, revenue was relatively flat for the first time after several years of significant decline in the legacy business,” he added.

Openserve vs Vumatel operational data
Network Openserve Vumatel
Homes passed 839,691 1,500,000
Homes connected 389,109 >450,000
Connection rate 46.3% 33.8%
Capital expenditure (fibre) * R2.052 billion R3.617 billion
EBITDA * R4.163 billion R3.619 billion
* Capex and Earnings Before Interest Taxation Depreciation and Amortisation (EBITDA) of whole CIVH group shown, which includes Dark Fibre Africa. CIVH’s Capex is an estimate for the 2022 financial year — audit not yet finalised.

Openserve’s advantage

Telkom’s fixed network infrastructure gives it an advantage over Vumatel when it comes to passing more homes.

Openserve’s existing fibre infrastructure spans 169,000km, while Vumatel’s network covers 31,000km.

Openserve could also benefit from migrating its copper DSL customers to fibre, reusing existing conduits and other passive infrastructure.

As a result, Openserve’s fibre rollout costs are substantially lower than other fibre network operators.

Compared with Vumatel, this is reflected in the pricing of its lower-tier packages.

However, Vumatel’s pricing trumps that of Openserve for packages with speeds of 100Mbps and above. This is despite Vumatel offering symmetrical upload speeds, while Openserve’s upload speeds are generally half its download speeds.

A comparison of Openserve’s and Vumatel’s pricing is summarised in the table below. The prices listed are on through the Internet service provider Afrihost.

Vumatel and Openserve pricing comparison
FNO Download Upload Price
Under 50Mbps
Openserve 25Mbps 10Mbps R497
Openserve 25Mbps 25Mbps R597
Vumatel 20Mbps 10Mbps R649
Openserve 50Mbps 25Mbps R697
Vumatel 50Mbps 50Mbps R729
Openserve 50Mbps 50Mbps R827
Vumatel 100Mbps 100Mbps R929
Openserve 100Mbps 50Mbps R947
Vumatel 200Mbps 200Mbps R1,047
Openserve 200Mbps 100Mbps R1,167
Vumatel 500Mbps 200Mbps R1,199
Openserve 500Mbps 250Mbps R1,347
Vumatel 1Gbps 200Mbps R1,497
Vumatel 1Gbps 500Mbps R2,347

Now read: Industry-first 20Gbps speeds on production fibre network

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Fibre war — Telkom’s Openserve vs Vumatel