{"id":546445,"date":"2005-06-07T00:56:56","date_gmt":"2005-06-07T00:56:56","guid":{"rendered":"http:\/\/localhost:8888\/wordpress\/technology\/546445-telkom-gears-up-for-competition.html"},"modified":"2005-06-07T00:56:56","modified_gmt":"2005-06-07T00:56:56","slug":"telkom-gears-up-for-competition","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/technology\/546445-telkom-gears-up-for-competition.html","title":{"rendered":"Telkom gears up for competition"},"content":{"rendered":"

Vodacom contributed 28% of revenue and 17% of taxed profit.<\/p>\n

Telkom\u2019s strong cash-generating abilities \u2013 which saw it end the period with R2,3-bn in the bank \u2013 resulted in the declaration of an annual dividend of R4 a share and a special dividend of R5 a share, both of which are to be paid to shareholders on July 8.<\/p>\n

Off the back of these numbers, Telkom\u2019s share price rose 1,3% to R119 apiece, an all-time high for the stock.<\/p>\n

Many Telkom watchers are left wondering whether stellar results like these are sustainable. They have several concerns.<\/p>\n

Steps are being taken by the Department of Communications to introduce more competition through the introduction of a second fixed-line network operator (SNO). Internet protocols are being legalisedAnd, furthermore, mobile operators are now able to self-provide infrastructure and not have to rely on Telkom for terminating calls. <\/p>\n

Telkom\u2019s primary revenue stream traditionally is in fixed-lines telephony, where growth has been stagnant over the last three years. While this contributes 71,5% of the group\u2019s revenues, the figure is a 4% decline from that posted last year. <\/p>\n

In addition, a breakdown of fixed-line revenue (which comprises calls and data \u2013 or Internet \u2013 traffic) shows the contribution from telephone calls being lower; for local calls (which form the biggest part of network traffic at 32%), the contribution to revenue is down 3%.<\/p>\n

Telkom CEO Sizwe Nxasana \u2013 who is due to step down at the end of the year \u2013 said that the growth of high-speed Internet connections through asymmetrical digital subscriber lines (ADSL) has caused the \u201ccannibalisation of voice revenues\u201d, and that the company will be feeling the pressure on margins. <\/p>\n

Data \u2013 together with replacing existing networks with those that can carry both voice and data \u2013 is where Telkom\u2019s future strategic direction lies, says Nxasana. <\/p>\n

Already, the numbers indicate an area of growth; in the year, the company saw a 15,6% increase in data revenue to R5-bn. It reported a 32% increase in managed data network sites to 11 961, and 49% growth in Internet customers to 225 280, of which 10% are broadband. <\/p>\n

Says Nxasana: \u201cIt is better of us to shoot ourselves in the foot and reduce revenue received per minute than not to move to annuity-based revenue\u201d. <\/p>\n

Nxasana says Telkom\u2019s future is in transforming its traditional business, by moving onto an Internet protocol (IP)-based network, aggressively rolling out ADSL and offering converged IP services. <\/p>\n

Once that is done, Telkom plans to focus more on its roles as an Internet service provider (where, along with MWEB , it is already a dominant player. It also sees its future in), being a value-added network service operator and a provider of information technology (IT) services. <\/p>\n

With the advent of more competition in the telecoms space, says Nxasana, Telkom would like to be the provider of choice for wholesale services: <\/p>\n

\u201cIf a company is faced with the decision of whether it should build its own network or go the wholesale route, we hope to make our offering more desirable\u201d.<\/p>\n

Mobility is another area where the company wants to expand. As a 50% shareholder in Vodacom, Telkom is set to benefit from Vodacom\u2019s planned roll out of wireless fidelity (WiFi) technology, which enables a person with a wireless-enabled computer or personal digital assistant (PDA) to connect to the Internet when in proximity of an access point, according to wikipedia.com.<\/p>\n

Nxasana says: \u201cWe want to be the number one IT and ISP company. We started in this space three years ago and have 25% of the market. We also want to maintain our position with the mobile operators. The move to a next-generation network competition is going to pave pressure on margins continue to drive prices down to be well positioned for competition. <\/p>\n

He adds that he \u201ccan\u2019t wait for the SNO to be up and running. We are ready for the competition,\u201d he says. <\/font><\/p>\n

Article courtesy of <\/font>Moneyweb<\/font><\/a> <\/p>\n

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Fixed-line operator Telkom on Monday posted results for the year to end-March 2005 that will no doubt leave shareholders very happy; headline earnings per share grew 47,5% to R12,41, operating profit was up 21% to R11,2-bn and the group\u2019s earnings margin came in at 40%.<\/p>\n","protected":false},"author":23,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_facebook_post_id":"","_sma_instagram_post_id":"","_sma_threads_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[17],"tags":[],"class_list":["post-546445","post","type-post","status-publish","format-standard","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/546445"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=546445"}],"version-history":[{"count":0,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/546445\/revisions"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=546445"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=546445"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=546445"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}