Telkom pleased with fixed line results

Telkom says its commitment to an aggressive broadband strategy has produced positive results for its fixed line business.

For the six months ended 30 September 2011 Telkom reported a growth in fixed line EBITDA margin from 37.5% to 39.1%.

Following the release of its results earlier today, the operator notes that the positive results would help pave the way for its journey towards true fixed mobile convergence and entry into the content aggregation market.

Group CEO, Nombulelo Moholi noted that in light of current market conditions this was a significant achievement for Telkom.

The fixed line business also reported a 3.9% decline of operating expenditure to R11.7 billion while ADSL subscribers increased 13.7% to 795,419.

“Globally, telecoms operators are coming under intense pressure as growth in fixed and mobile voice revenues slow considerably. The decline of fixed-line voice is a common theme across all markets,” explained Moholi.

However she pointed out that in comparison a burgeoning appetite for data has resulted in a boosted growth in broadband services.

“In this context, we understand that we must make a significant step change in our strategy and approach to execution, not simply to defend our market share, but to grow our business and our revenues,” said Moholi.

Moholi explained that Telkom’s current DSL penetration (excluding wholesale DSL) stands at only 19.5% of the fixed-line base allowing an opportunity for Telkom to offset declines in voice revenues by growing broadband penetration.

Telkom will focus its strategy on growing and defending profitable revenues in its Consumer business by increasing broadband penetration in South Africa.

“We are enabling our target offering through high speeds and capped and uncapped offerings which consistently provide greater value for the same price.”

The Company anticipates a further shift of its analogue connections to broadband as the confidence in Telkom’s most recent broadband offerings grow. The drive towards full convergence has also bolstered a significant interest in the acquisition of fixed-lines as fixed lines form an imperative part of convergence.

Free broadband trials are cementing the belief that fixed-line broadband is unparalleled in terms of Quality of Service and that mobile broadband complements rather than replaces Telkom’s ADSL service offers.

Going forward Telkom will also simplify and streamline product offerings and communication. Our new product catalogue will be launched in November 2011, said Moholi.

Telkom will be using new approaches in how these products are distributed, specifically developing our push and new pull channels, while ensuring that staff is knowledgeable and customer oriented in our current channels.

Moholi explained that the strategy would also focus on growing and defending profitable revenues for Business customers through entry into high growth adjacencies focusing on Convergence, Value Added Services and ICT offerings.

She identified network transformation through the successful rollout of a commercially led next generation network as another key focus of the strategy.

“Executing on these strategic imperatives will be challenging, but we have a strong foundation of recent successes on which to build. We launched South Africa’s fourth mobile player, 8•ta, in 2010 and have recently launched Telkom Business Mobile to early excitement in the market. Cybernest has also seen some early successes, and there has been progress on the network transformation.”

“It is clear that we need to be the best we can be in our current businesses while accessing growing revenue pools in selected adjacencies. We are transforming our network to allow us to move further into the mobile and select value-added ICT markets,” concluded Moholi.