The jungle book

Telkom puts “broadband victory” at the heart of its strategy

Serame Taukobong, CEO of Telkom Group.

Telkom today released its 2022 Integrated Report, which shows that it has placed “Broadband Victory” at the heart of its business strategy.

The report comes as Telkom is in talks with rival MTN over a takeover bid for the former. Discussions are at an early stage, with Telkom and MTN saying there is no certainty the transaction will be completed.

“The broadband win is the backbone of our strategy, supporting Telkom’s aspiration to become South Africa’s leading broadband service provider,” Telkom Group CEO Serame Taukobong said in the report.

“Over the past few years, we have invested in mobile and fiber infrastructure assets to prepare for 5G, and our combined asset base sets us apart from our competitors.”

According to Taukobong, at the end of fiscal 2022, Telkom had more than 11 million total broadband subscribers – mobile at 10.5 million and fixed broadband at 500,000 – and 79% of fixed broadband customers in enterprise use 10 Mbps and above, supporting higher data consumption.

He notes that Openserve is one of the market leaders in the South African fixed market, with around 840,000 homes served and a fiber-to-the-home (FTTH) connectivity rate of over 46%.

“This year has been a pivotal year in terms of winning broadband thanks to the additional mobile spectrum we’ve secured,” Taukobong says. “We got 20MHz of 800MHz and 22MHz of 3500MHz for R2.1 billion. Telkom’s total spectrum portfolio now stands at 170 MHz across all bands. »

He explains that the newly acquired spectrum will allow the company to offer a credible 5G proposition. “Sub-1GHz allows us to deploy networks more efficiently and increase coverage.”

Telkom made a payment of R1.1 billion in FY2022, with the remainder due when the sub-1GHz spectrum, currently occupied by broadcasters, becomes available.

However, this licensing process was the subject of a legal challenge by Telkom, which has since been settled.

Telkom said it has opted for a prospective settlement with the regulator, the Independent Communications Authority of South Africa, addressing its main complaints about ensuring fair competition in the sector, while providing a level of regulatory certainty.

Telkom points out that Openserve’s stabilization path continues and revolves around several years of declining revenue.

He notes that the Openserve business has evolved as customers have migrated over the years from legacy connectivity to next-generation connectivity. Today, more than half of his income comes from the new business, Taukobong says.

However, he says a price gap remains between the new company and the old company. “Revenue was relatively stable for the first time after several years of significant decline in legacy business. This was supported by growth in high capacity carrier links, increased demand for fiber services and a slowdown in fixed voice churn.

The telecom operator says Openserve continued its growth trajectory in the fiber market, increasing fiber-connected homes by 52.7% and fiber-connected homes by 38.4%.

This is in line with its strategy to accelerate the FTTH footprint while simultaneously focusing on connecting homes, the company says, adding that in the second half of the year, the total number of fixed broadband customers increased for the first time since several years despite the drop in ADSL. clients.

Openserve invested R3.4 billion in capital to upgrade and expand the network during the year. “This has enabled a flexible, modular and scalable network architecture that has enabled Openserve to deliver high-speed, increased-capacity networks across South Africa, which is reflected in increased fixed data consumption. 16.6% across our network,” says Taukobong.

“During the unrest in KwaZulu-Natal and Gauteng in July 2021, our access network suffered multiple outages. However, we did not lose any traffic on our core network thanks to our ability to use automatic rerouting restoration in the event of a fiber break in the network.

On the mobile front, the company says the segment continues to drive growth in the Telkom Consumer business.

This growth was achieved against the backdrop of an intensely competitive landscape and challenging economic environment, the company explains, adding that as global macroeconomic constraints began to materialize, the prepaid push slowed as the share of portfolio spending was leveling off.

“We continued to grow our prepaid customer base, with average revenue per user (ARPU) normalizing to pre-COVID-19 levels, in line with management expectations. In the postpaid consumer market, we grew the postpaid base and maintained high levels of ARPU,” the company said.

“The traditional fixed telephony business remains under pressure due to the migration from traditional fixed voice to new technologies. The impact of post-pandemic recovery is still evident in small and medium-sized businesses. We remain encouraged by the growth of our non-connectivity/applications services, which experienced double-digit growth in the year under review, with a focus on financial services, games and content.