Telkom fixed lines slump, but it’s not all doom and gloom

While Telkom is cleaning up in mobile, its fixed-line business continues to feel pressure as competition bites and as the company continues to switch off wireline infrastructure in favour of fixed-wireless 4G/LTE-based alternatives.

However, the company is performing well in key fixed-line metrics, including the fibre attachment rate — the percentage of consumers subscribing to fibre-to-the-home services where they are available.

Fixed broadband subscribers plunged by 13.6% to 848 000 in the year ended 31 March 2019 (previously 981 000). The number of fixed lines in service declined by 15.3% to 2.3 million (2.7 million previously), while revenue per fixed line fell by 3.4% to R4 545 (R4 703).

While these declines may appear shocking, they tell only part of the story: Telkom’s broadband customer base, which includes fixed-LTE services, rose by 8.4% to 1.7 million. So, while consumers are ditching legacy copper-based services like ADSL (or being forced to ditch them as Telkom switches off fixed-line services in areas that aren’t economically feasible or where copper theft has become endemic), they aren’t necessarily abandoning Telkom, but rather signing up for fixed-replacement services like fixed-LTE.

Despite the decline in the number traditional fixed-line subscribers, consumers continued to use more data, too — consuming more than a million terabytes in the financial year, up 20.6%. Mobile broadband data volumes surged by 97.9% to 380 000TB.

Fibre-to-the-home subscriptions also showed robust growth, rising by 20.7%. The attachment rate jumped to a healthy 38.4% from 30.7% previously.

Voice declines

The picture in fixed voice services, however, is far less rosy: voice usage revenue plummeted 15%, while fixed voice revenue declined by 14.7% to R10.5-billion. Fixed subscription revenue fell by 14.5%. Fixed interconnection revenue decreased 8.8% to R792-million, mainly due to lower traffic volumes.

Telkom blamed migration to new technologies and the 15.3% decline in the number of fixed lines for the poor performance.

Openserve, Telkom’s wholesale services business, saw strong margin expansion — when measured using earnings before interest, tax, depreciation and amortisation. Ebitda margin grew by 3.4 percentage points to 37.1%.

“Openserve’s revenue was resilient despite customers migrating to next-generation technologies at lower price points,” Telkom said. “Despite pressure on revenue and a change in our revenue mix, Ebitda grew at a better rate than the previous years. This was enabled by, among other things, our strategy to modernise the network to improve cost to connect and reduce cost to serve.”

During the financial year, Telkom grew its fibre footprint by 6 400km, bringing the total network to 164 800km.  — © 2019 NewsCentral Media