While Telkom is cleaning up in mobile, its fixed-line business continues to feel pressure as competition bites and as the company continues to switch off wireline infrastructure in favour of fixed-wireless 4G/LTE-based alternatives.

However, the company is performing well in key fixed-line metrics, including the fibre attachment rate — the percentage of consumers subscribing to fibre-to-the-home services where they are available.

Fixed broadband subscribers plunged by 13.6% to 848 000 in the year ended 31 March 2019 (previously 981 000). The number of fixed lines in service declined by 15.3% to 2.3 million (2.7 million previously), while revenue per fixed line fell by 3.4% to R4 545 (R4 703).

While these declines may appear shocking, they tell only part of the story: Telkom’s broadband customer base, which includes fixed-LTE services, rose by 8.4% to 1.7 million. So, while consumers are ditching legacy copper-based services like ADSL (or being forced to ditch them as Telkom switches off fixed-line services in areas that aren’t economically feasible or where copper theft has become endemic), they aren’t necessarily abandoning Telkom, but rather signing up for fixed-replacement services like fixed-LTE.

Despite the decline in the number traditional fixed-line subscribers, consumers continued to use more data, too — consuming more than a million terabytes in the financial year, up 20.6%. Mobile broadband data volumes surged by 97.9% to 380 000TB.

Fibre-to-the-home subscriptions also showed robust growth, rising by 20.7%. The attachment rate jumped to a healthy 38.4% from 30.7% previously.

Voice declines

The picture in fixed voice services, however, is far less rosy: voice usage revenue plummeted 15%, while fixed voice revenue declined by 14.7% to R10.5-billion. Fixed subscription revenue fell by 14.5%. Fixed interconnection revenue decreased 8.8% to R792-million, mainly due to lower traffic volumes.

Telkom blamed migration to new technologies and the 15.3% decline in the number of fixed lines for the poor performance.

Openserve, Telkom’s wholesale services business, saw strong margin expansion — when measured using earnings before interest, tax, depreciation and amortisation. Ebitda margin grew by 3.4 percentage points to 37.1%.

“Openserve’s revenue was resilient despite customers migrating to next-generation technologies at lower price points,” Telkom said. “Despite pressure on revenue and a change in our revenue mix, Ebitda grew at a better rate than the previous years. This was enabled by, among other things, our strategy to modernise the network to improve cost to connect and reduce cost to serve.”