The emergence of as many as two dozen rivals in the fibre-to-the-home (FTTH) broadband market is good for Telkom, good for consumers and good for the economy, Telkom CEO Sipho Maseko said at a media briefing on Monday.
Responding to a question from TechCentral about whether Telkom’s core business of fixed lines is at risk from new FTTH providers, particularly as the company focuses internally on restructuring its business and reducing costs, Maseko said he welcomes the competition.
“Indeed, there is a competitive threat, which is good for Telkom as well,” he said. “We come from … a past where we never competed for anything. [Competition is] good for consumers and the economy.”
Maseko said recently that Telkom has identified as many as two dozen players in the burgeoning FTTH market. Companies such as Vumatel and Link Africa are in a race to wire up South African suburbs to high-speed fibre broadband.
Though Telkom has deployed some FTTH infrastructure, most of its access network still uses copper. Copper-based broadband is inferior to fibre for broadband services, although Telkom has been investing in upgrading some neighbourhoods to the faster VDSL technology, which provides access speeds of up to 40Mbit/s over copper networks.
Maseko said competitive pressures have already forced Telkom to improve its broadband pricing. “But as you respond by reducing prices and modernising the network, the revenues you can capture reduce on an ongoing basis, and you can’t ignore the cost bubble you have behind you.”
He said Telkom is committed to both reducing costs and modernising its network.
He added that the company’s FTTH infrastructure now passes — though doesn’t necessarily connect — 70 000 homes.
Barely a week goes by, Maseko said, where Telkom doesn’t win a new FTTH contract. The latest of these is at Zimbali Lodge in KwaZulu-Natal. “Even some competitors who have won contracts, like in Constantia [in Cape Town], have come and said, ‘Can you help us?’”
Maseko conceded, however, that Telkom needs to be faster in deploying new home fibre infrastructure.
But, he said, by Telkom’s mid-year financial results, “we will be informing the market about significant progress around FTTH overall”. Telkom’s first financial half ends on 30 September.
“The investment in expansion and modernisation of the network is not going to stop.” — © 2015 NewsCentral Media
