Fixed services are a weight around Telkom as mobile struggles to shine

While it makes sense that fixed-line voice from Telkom has seen a sharp decline when it comes to revenue, what we do find curious is the fact that fixed-line data connectivity is on the decline as well.

Telkom released its financial results for the year ending 31st March this morning and, while there are some big wins, as we pointed out above, there are some curiosities as well.

Revenue from fixed services fell 16.6 percent to R15.1 billion which is to be expected as Telkom shifts away from ADSL and copper-line services. But things don’t look any better if we look at broadband numbers. Telkom reports that fixed broadband subscribers declined by 11.8 percent from 686 525 to 605 807 during the financial year.

The telco says that the group’s fixed and IT services were impacted by COVID-19 which is strange to us as one would’ve thought that the need to stay home would improve demand for fixed-line connectivity.

Of course, folks could’ve just moved to another operator and given how aggressive marketing was during the peak of lockdown – that’s not beyond the realm of possibility.

Despite this decline, Openserve continues to rollout fibre to the home services and has passed 549 957 homes to date.

But enough bad news because there was some good news in Telkom’s financial results.

Revenue didn’t climb much but a 0.4 percent gain to R43.2 billion is still a win.

Mobile revenue is the big winner for Telkom despite its loses in the fixed services department. Telkom added 25.6 percent more mobile broadband subscribers to its network by March 2021 while mobile services subscribers grew 27.8 percent over the same period.

Of note is that Telkom added more pre-paid subscribers during the year to grow its base to 12.7 million. Average revenue per user from prepaid has climbed to R77.05, a 17.5 percent increase from the previous year.

“Allocating capital to a data-led and fibre-enabled mobile networks – a growth area of our business – successfully prepared us for the significant increase in data demand and mobile broadband services as more people worked, did business and studied from home,” says Telkom Group chief executive officer, Sipho Maseko.

Mobile is the big moneymaker for Telkom then and with plans to rollout a 5G network, we suspect it will continue to be the revenue driver it is. That having been said, something has to be done about fixed-line services.

While any sort of revenue growth in the current climate is good, fixed services are clearly a weight around Telkom’s ankles but the firm also can’t simply abandon that section of its business entirely, at least not yet.

Overall though it was a decent year for Telkom especially during a pandemic.


About Author


Related News