Openserve launches its own ISP, rattling wholesale partners — An Openserve technician working on a fibre line

Telkom’s Openserve has quietly launched its own internet service provider, potentially setting itself up in competition with its own ISP customers – and some of those customers are already voicing concern at the move.

The wholesale fibre network operator’s new direct channel, Openserve ISP, sells uncapped fibre packages to consumers through a web store, with prices ranging from R345 to R1 449/month. Every product is offered on month-to-month terms with no installation fee and a Wi-Fi modem included – terms that ISPs buying wholesale access from Openserve typically fund only against 12- or 24-month contracts.

The Internet Service Providers’ Association told TechCentral that its members are worried.

“Ispa’s members have raised several recent concerns with Ispa relating to Openserve, including their decision to launch their own ISP and hikes in call termination rates that have resulted in wholesale prices hundreds of rands more than their retail rates,” it said. “Ispa is canvassing its members’ views and will address any concerns regarding potential anti-competitive behaviour to Openserve management team, or the competition authorities, as appropriate.”

In a notice sent to its wholesale partners, seen by TechCentral, Openserve chief commercial officer Makgosi Mabaso sought to reassure ISPs that the company’s “strategy remains firmly rooted in being an open-access wholesale fibre network” and that it will continue providing wholesale services in line with its “long-established principles of fairness, transparency and non-discrimination”.

‘Additional channel’

The new ISP, the notice said, provides “an additional channel” to increase fibre adoption and reach underserved communities.

Wholesale customers who spoke to TechCentral are unconvinced. Their central complaint is not the headline pricing – which sits broadly within the existing retail band – but the bundled terms. Because Openserve pays itself for the line and the installation, they argue, it can give away hardware and installation on a no-commitment service in a way no reseller can match without destroying its margin. At the entry level, one industry player said, Openserve is now selling below any price at which an ISP can buy the equivalent wholesale product and serve the customer.

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The deeper concern is structural. Telkom’s retail arm, Telkom Consumer, has always sold services over the Openserve network – but from a separate company in the group. The new channel sits inside the wholesale entity itself, meaning the business that sets wholesale prices, processes ISPs’ orders, faults and customer data, and controls provisioning and repairs is now competing directly for those ISPs’ subscribers. Wholesale customers TechCentral spoke to say they want written undertakings that Openserve’s retail operation buys access on identical terms, systems and timescales to third parties, and that reseller data is ring-fenced from the retail business.

The move is a striking reversal of two decades of policy history. An Ispa complaint ultimately led to the Competition Commission’s 2013 settlement with Telkom – including a R200-million penalty and functional separation commitments – over margin squeeze and exclusionary conduct.

Openserve was created as a division of Telkom in 2015 and legally separated into a standalone company in September 2023, a step Ispa welcomed at the time as levelling the playing field. Industry players also point to the asymmetry with the Vodacom-Maziv transaction, in which the competition authorities spent more than three years scrutinising vertical integration risk before approving the deal under extensive behavioural conditions – whereas Openserve has integrated retail into its wholesale business with no conditions at all.

TechCentral has put detailed questions to Telkom, asking:

Why the retail channel was launched inside the wholesale entity rather than through a separate company buying at published wholesale rates – and how this is not a reversal of the separation logic that created Openserve;
Whether an equally efficient ISP, buying Openserve’s wholesale inputs at current rate-card prices, can match the direct offer’s free modem, free installation and month-to-month terms and still make a positive margin; and
Whether the direct channel acquires lines, provisioning slots and repair priority on exactly the same prices, terms, systems and timescales as third-party ISPs, including whether Openserve will give independently audited equivalence and transfer-pricing undertakings.