Multi-Links good for Telkom
Following Telkom’s announcement of the disposal of its stake in Vodacom, the market is watching the telecommunications giant closely to see how it will reposition itself. While Telkom’s latest results still rely heavily on the contribution from Vodacom, the company is gearing itself to grow revenues in other areas.
The company’s interim results released today show a 9.8% growth in operating revenue to R29.884 billion. Fixed-line revenues grew 2.8% to contribute R16.6 billion, while Vodacom’s share increased by 14.0% to R13.008 billion. However, operating profit showed an overall decrease of 9.3% to R6.7 billion.
“The slowdown in the fixed voice segment will necessitate the expansion of business lines for Telkom,” says Frost & Sullivan ICT analyst Spiwe Chrieka. “The recent purchase of MWeb is another step in that direction, hot on the heels of the purchase of Africa Online last year. Data uptake in Africa is still minimal, but if Telkom invests in the relevant infrastructure in its data markets, the rewards will most definitely pay off.”
There are already positive signs in Nigeria, following the purchase of its 75% stake in Multi-Links. While the operator reported a net loss for the period, the significant growth in subscribers, shows the potential for revenue generation in this region. Multi-Links added nearly a million new subscribers in the six month period to September.
“Multi-Llinks is well positioned to become a major revenue generator for Telkom, as indicated by the high subscriber growth figures,” says Chireka. “With the fixed-mobile convergence strategy becoming a key focus area for Telkom, we can expect more investment and expansion in this operation.”
Many traditional fixed-line operators in Africa are pursuing expansion through Fixed Wireless Access technologies such as WiMAX, CDMA and W-CDMA. Telkom is likely to follow the same route for its future network expansion on the continent, as the advantages of deploying such technologies are on par with those of mobile technologies.
Locally, Telkom can expect to face intensifying competition following the high court ruling that service providers will be able to self-provision. This means that companies such as Altech and Internet Solutions will be in a position to build their own infrastructure and compete directly with the incumbent.
“Neotel’s launch of commercial services is also expected to ‘eat into’ Telkom’s subscriber and revenue bases,” adds Chireka.
Loading ...