Telkom fixed-line carnage

Telkom’s latest annual results show that the company has shed around 184,000 fixed-line subscribers in the past year.

Telkom’s fixed-access lines, which include subscribers with copper voice and broadband packages, dropped 23.2% from 793,000 in March 2023 to 609,000 by March 2024.

That means the company lost nearly a quarter of its fixed-access customers in a year.

Telkom had a monopoly on fixed copper voice and broadband services for around two decades.

However, the growth of Internet-based mobile voice and heavy competition from fibre network operators (FNOs) in the fixed-line market has all but eradicated its advantage.

Telkom’s latest fixed-line losses were somewhat offset by growth in fibre services.

While Telkom retail’s own fixed broadband subscriber base continued to decline year-on-year, this drop was much less pronounced, with a 2.2% decrease from 567,289 to 554,953.

Its Internet all-access subscribers, which includes copper and fibre customers, increased 2.5% from a year ago to 246,398 customers.

That shows that the big drop in fixed access lines is primarily due to customers dropping conventional telephone lines.

Telkom’s Internet all-access subscriber boost can be attributed to its wholesale division Openserve significantly expanding its fibre-to-the-home (FTTH) network, which has also boosted external revenues.

Openserve passed over 1.2 million households with fibre by the end of March 2024.

“Openserve invested R2.547 billion to modernise its network and drive fibre deployment to pass 1,217,110 homes, a 17.0% increase,” Telkom said.

“Its connect-led strategy continues to see positive results, enabling it to increase its homes connected by 19.8% to 590,527.”

With this growth, Openserve remains the second biggest fibre network operator (FNO) by households passed and connected.

It is second to Vumatel, which passed over 2 million homes in late 2023 and connected 664,000.

The proportion of households that have access to and connect to Openserve’s network is much higher.

Vumatel’s connectivity ratio was last reported to be around 33.2%, meaning that about one in every three households with access to its network have taken up a Vumatel package.

The 590,527 Openserve FTTH customers make up 48.5% of the 1,217,110 households with access to its network.

That is 1.1 percentage points more than a year ago and means that almost half of the households that have access to Openserve fibre are connected to its network.

The connectivity ratio is an important metric used to measure the effectiveness of FNO rollout strategies.

If the connectivity ratio is low, it can indicate that there was little or insufficient demand for an FNO’s service in certain areas.

However, it can also just signal that an operator is expanding aggressively by rolling out faster than customers can take up its service.

Openserve infrastructure in Midstream Estate

Telkom’s external revenues

The growth in fibre on Openserve’s network has increased the contribution of next-generation revenue to 93% of Openserve’s total external wholesale revenue.

External wholesale revenue includes the revenue Openserve made from the numerous third-party Internet service providers — including Afrihost, Webafrica, RSAWeb, and others — that resell its FTTH services.

This figure — which excludes Telkom retail revenue — increased 10.7% to R4.526 billion.

“This external growth contributed to the total NGN fibre revenue, which grew by 7.4% and now represents 76.4% of Openserve’s overall revenue of R12.511 billion,” Telkom said.

Telkom also said that Openserve provided an exceptional customer experience, with “industry-leading” network availability uptimes of 99.86%, 99.85% and 100% across its access, transport, and core network layers, respectively.

“The resilience and high availability of its network could also be seen through the growth in data consumption of 2,307 petabytes, an increase of 21.7%,” Telkom said.