Telkom pumped R757m into fibre-to-the-home (FTTH) broadband infrastructure in the year ended 31 March 2016, an increase of 200% over the R252m it spent in the 2015 financial year, and has said it plans to spend significantly more in the current financial year.
In the next year, Telkom intends spending at least R2,3bn on its FTTH network. “We will win this fibre race going forward,” said chief financial officer Deon Fredericks.
The spend in the 2016 financial year on FTTH outstripped the company’s expenditure on its mobile network, which totalled R660m (an increase of 37,2% over a year ago), signalling a reprioritisation of the company’s spending towards its fixed-line network as it seeks to fend off start-up rivals in the home fibre broadband market.
“FTTH expenditure … has been aligned to the company strategy and there is an enhanced focus on fibre deployment, with a stated plan to pass one million homes by 2018,” Telkom said in notes alongside its 2016 financial results.
At the end of March, Telkom had passed 81 503 homes with fibre.
The increase in mobile spending was due to a continued focus on LTE deployment for the provision of fixed-wireless access and mobile products. The investment is “intended to protect and grow our revenue base”, Telkom said. At end-March, it had 1 448 LTE sites, up by 9,9% from a year ago.
Telkom also ramped up IT spending, investing 34,7% more (R544m in the 2016 financial year) in its operational and business support systems to “ensure fulfilment assurance and billing requirements relating to our product portfolio”.
“The programme will continue to focus on the improvement of operational efficiencies and will support the launch of next-generation products,” the company said.
Spending on network rehabilitation rose by 57,1% to R674m. This money was used mostly for the replacement of obsolete power systems as well as the replacement and modernisation of the access and core networks.
“The increase is due to a focus on access network rehabilitation to improve the customer experience for voice and ADSL services,” Telkom said.
The single biggest spending category was “service on demand”, where Telkom provides last-mile connectivity and related customer premises equipment. Here it spent R1,5bn, up marginally in the 2015 outflow.
Expenditure on the company’s next-generation network decreased from R857m in March 2015 to R553m in March 2016 due to the prioritisation of FTTH and fibre to the business as well as the IT support systems. — (c) 2016 NewsCentral Media