{"id":548467,"date":"2006-04-06T15:05:57","date_gmt":"2006-04-06T15:05:57","guid":{"rendered":"http:\/\/localhost:8888\/wordpress\/technology\/548467-telkom-gets-thumbs-down.html"},"modified":"2006-04-06T15:05:57","modified_gmt":"2006-04-06T15:05:57","slug":"telkom-gets-thumbs-down","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/technology\/548467-telkom-gets-thumbs-down.html","title":{"rendered":"Telkom gets thumbs down"},"content":{"rendered":"

Shares in the telecommunications company fell 6% to R151 on Thursday morning, as the market digested the news, which was released just before the market closed on Wednesday. <\/font><\/p>\n

The reaction may point to concerns that the capital expenditure plans will eat into Telkom\u2019s traditionally generous dividend payouts. <\/font><\/p>\n

Telkom \u2013 whose largest shareholder is government at 38,5% \u2013 is outlining its business strategy to analysts at its Centurion headquarters today. It says that for its fixed-line business, it expects the capital expenditure to revenue is expected to be within the 18% to 22% range, while its debt-to-equity ratio is expected to come in between 50% to 70% for the year to end-March 2007. <\/font><\/p>\n

Over the same period, the guidance for its earnings before interest, tax, depreciation and amortisation (Ebitda) margin is between 37% and 40%, and the ratio of employee expenses to revenue to be between 20% and 22%. <\/font><\/p>\n

In the first part of the presentation (available on Telkom\u2019s website), Telkom CEO Papi Molotsane cited the slowing mobile growth, growing competition (with the second network operator, carrier pre-selection, and smaller service providers being able to carry voice over internet protocol), and more informed and demanding customers as key challenges the company is addressing. <\/font><\/p>\n

Molotsane also said \u201ctighter and rapidly changing regulations\u201d \u2013 with cost-based pricing being introduced by the Independent Communications Authority of SA (Icasa), and the changes to be introduced by the Electronic Communications Bill as a challenge. <\/font><\/p>\n

The company is not sitting back, though, and is working ferociously on new revenue streams and opportunities. \u201cVoice will eventually play less important roll in driving the revenue of the company,\u201d said Molotsane, whose upbeat tone indicated that Telkom is embracing the challenge. <\/font><\/p>\n

Chief sales and marketing officer Wally Beelders says that the introduction of the SNO may see Telkom losing up to 15% of market share over five years, but that this is a bearish outlook. However, this is totally in line with what has happened in the UK to British Telecom, which lost between 10% and 12% loss. <\/font><\/p>\n

A loss of market share does not mean lower revenues, though. Molotsane said he expects a 15% to 20% increase in broadband (ADSL) lines to one million customers within three to five years\u2019 time. Regarding expectations for local loop unbundling \u2013 which would enable other players to access the last mile of infrastructure taking fixed telecoms services into homes and offices \u2013 Molotsane said he expected \u201cthere will be some form [of unbundling], full or partial, we don\u2019t know, but we will be innovative around this\u201d. <\/font><\/p>\n

Beelders said another key driver would be to introduce higher speed ADSL, introduce next-generation data services like metro Ethernet, introduce bandwidth on demand services and broadband bundles. He said broadband would be a natural area for growth and that broadband penetration is very low when compared with developing countries with similar gross domestic product per capita growth figures. <\/font><\/p>\n

It also plans to make the most of fixed-mobile opportunities, introducing dual-mode handsets (which would move between fixed and mobile networks), use voice portability opportunities through the wireless WiMax technology it is currently working towards rolling out, and using the synergies with its 50% joint venture Vodacom, providing customers with, for example, a single bill. <\/font><\/p>\n

Also, Telkom is not concerned about the risk that advances in mobile broadband could pose to its fixed ADSL product. Chief operating officer Reuben September explained that the combination of the fixed and WiMax technologies would make Telkom \u201cformidable from a broadband perspective\u201d. <\/font><\/p>\n

Other plans include aggressively growing data and converged internet protocol services, and expanding outside of SA. <\/font><\/p>\n

Strategically, Telkom\u2019s target for 2010 is to be the information communications technology (ICT) leader in three countries outside SA. Molotsane said the company \u201chas its ears on the ground\u201d and is looking at several opportunities in Africa, including Kenya. Also, Nigeria was not off the screen. <\/font><\/p>\n

Beelders said it would look at equity stakes, joint ventures and management contracts. He said Telkom would go for equity only if the stake were greater than 50%; if less, Telkom would seek to hold the management contract. <\/font><\/p>\n

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Molotsane said Telkom is also embarking on a major drive to improve customer satisfaction. <\/font><\/p>\n

Discuss this article<\/font><\/a> <\/font><\/p>\n

Source:\u00a0 <\/font>http:\/\/www.moneyweb.co.za<\/font> <\/a><\/p>\n

\n","protected":false},"excerpt":{"rendered":"

The market didn\u2019t like news that fixed-line operator Telkom plans to spend R30bn on its fixed-line network over the next five years. <\/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-548467","post","type-post","status-publish","format-standard","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/548467"}],"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=548467"}],"version-history":[{"count":0,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/548467\/revisions"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=548467"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=548467"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=548467"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}