The telecommunications operator is yet to provide a clear picture of how it will grow its business after the sale of Vodacom, they say.<\/p>\n
Telkom released its year-end results today, showing a 6.9% increase in group operating revenue, but decreased earnings, margin and profits.<\/p>\n
Operating expenses jumped 19.5%.<\/p>\n
South Africa remains the main focus of business, with good growth in data revenues.<\/p>\n
“Telkom needs to reposition itself as a matter of urgency,” says Frost & Sullivan ICT industry analyst Spiwe Chireka.<\/p>\n
“The sale of Vodacom has cast doubt on the future performance of the company, as it continues to be viewed as a fixed line operator.<\/p>\n
Given that fixed line services are losing ground to new technologies, it is important that it takes a page out of the books of mobile operators like Vodacom and MTN.”<\/p>\n
Chireka notes that these companies are increasingly repositioning themselves as integrated telecommunications providers and promoting this image.<\/p>\n
She believes that as long as Telkom doesn’t manage to cast itself in this light, confidence in the operator will continue to decrease.<\/p>\n
“A good image and positioning is key for both customer acquisition and the company’s expansion plans,” she says.<\/p>\n
“Telkom needs to work quickly to turn the Vodacom sale into something positive.”<\/p>\n
Frost & Sullivan believes that the cash generated by the sale of Vodacom should enable Telkom to invest in highly lucrative opportunities such as the expansion of Next Generation Networks into Africa.<\/p>\n
“Competition in the South African market has intensified and is bordering on cutthroat, especially with the implementation of the new licensing regime and SEACOM coming online this year,” Chireka says.<\/p>\n
“Telkom therefore has to start shopping for opportunities outside of these borders.”<\/p>\n
Frost & Sullivan has seen unprecedented growth by fixed-wireless access providers, especially on CDMA networks elsewhere in Africa.<\/p>\n
This could present a frontier for expansion for Telkom, as the mobile and broadband markets are increasingly becoming saturated.<\/p>\n
The company does however note in its results that its initiatives in Africa have posed difficulties due to high start-up costs, the challenges associated with new markets, infrastructure and technology challenges, skills requirements and volatile currency and interest rate markets.<\/p>\n
“Converged service offerings to businesses are also seeing growth in the South African telecoms market,” Chireka notes.<\/p>\n
“With the vast investments Telkom has made in its Next Generation Network, it is likely to be well positioned to take advantage of this.”<\/p>\n