How Telkom is Slowly Winning the Battle to Replace Fixed-Line with LTE, FTTH?

Telkom’s wireless service is more reliable than its copper-based technology and is less susceptible to interruptions as a result of adverse weather conditions, faults and cable theft.

The South African telco first announced the transition from copper-based technology to wireless in 2015 noting that the migration would be done as a phased approach.

Having successfully migrated over 96% of prepaid fixed-line customers, Telkom is now migrating postpaid fixed copper-based voice and/or DSL customers to fibre and wireless.

Telkom today announced its financial results for the year ended 31 March 2020, which showed that fixed-line decline 29.3% to 1.6 million versus 2.2 million in the same period last year.

As expected Telkom’s fixed-line revenue dropped by 13.5% year on year to R8.2 billion, while fixed subscription revenue was down by 21.2% to R5.2 billion.

But Telkom also saw a 5.8% rise in fibre-to-the-home (FTTH) subscribers to 455 553 in the year to end-March 2020.

“Our FTTH connectivity rate improved to 48.2%, which is the highest connectivity rate in the market. We increased our investment in the packet-optical transport network, which will future-proof the core network,” said Sipho Maseko, Telkom CEO.

“This is the foundation for software-defined networks and network function virtualisation capability.”

Mobile broadband also rose by 28% to 8.1 million customers versus 6.3 million in March 2019.

Capital investment of R7.8 billion, with capex to revenue of 18.0%, underpins growth. More
than 47% of the capital investment was in the mobile business, increasing by 22.1% to
R3.7 billion.

“We are seeing good returns, with mobile service revenue increasing by 54.4%,” said Maseko.

“The accelerated investment was to support growth in the mobile business and to prepare
for the accelerated migration of customers to LTE/LTE-A and fibre. The investment in
FTTH was rationalised as we focus on areas showing a propensity for higher connectivity
rates.”

Maseko added that Telkom’s investment in FTTH was rationalised to focus on areas showing a propensity for higher connectivity rates.

“The FTTH connectivity rate improved from 38.4% to 48.2% – the highest in the market. In line with our cost reduction drive, we reduced the unit cost to deploy fibre to the home by 40% and we continue to look at opportunities to optimise the cost further, which will enable a more aggressive future deployment.”