Telkom overhauls fixed-line offerings

Telkom consumer CEO Attila Vitai.

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Telkom is making an aggressive play for more broadband subscribers, unveiling a complete overhaul of its fixed-line product offering.

The telecoms operator launched new Unlimited Home Internet and voice plans, at an event in Johannesburg on Friday. The new uncapped deals for ADSL and fibre customers offer improved speeds, lower prices, free calls on the Telkom network and include free line rentals.

"South Africans want more affordable data and that's what we are giving them. We are reducing the cost to communicate and making the Internet more accessible," said Telkom consumer CEO Attila Vitai.

Part of the new deals is a push by the telco to get more customers onto uncapped packages.

"It's really a strong drive to move into an uncapped direction, so we are seeing that in the not too distant future, we want all of our customers on uncapped," said Erna Korff, managing executive for product development and management for the consumer and small business segment at Telkom.

"We have changed the ISP [Internet service provider] model from a usage-based model to a more IPC model [IP Connect], so that has definitely enabled us, from a retail point of view, to have more flexibility in terms of our packaging and pricing.

"But it also comes from a big change in our customers' needs and behaviour, where we believe the sustainability of the fixed-line services is in enabling an unlimited entertainment and streaming environment," Korff added.

Vitai told journalists that Telkom has been listening to customers who are calling for unlimited data.

"There has been a big movement in the country for #DataMustFall. With our announcement today, we can honestly say data has fallen at Telkom," he said.

Telkom's announcement was not surprising to Africa Analysis senior analyst Ofentse Mopedi, who believes that as South Africans' appetite for data increases, offerings like these are inevitable.

"It became clear since late 2012 when mobile operators commercialised their high-speed data networks (LTE), and also in 2014, when MTN and Vumatel started monetising their fibre networks, that change in the broadband market was inevitable," he told ITWeb.

Mopedi adds these developments "were clearly ominous for Telkom in the sense that residential customers and businesses were for the first time able to access telecoms services with Telkom completely absent in the entire ecosystem".

"If you have been following Telkom over the past three years, you will come to realise this operator is not only doing well in responding to the highly competitive telecoms environment, but has actually been driving most of the change we see today, having positioned itself as a formidable innovator," Mopedi adds.

He says a key differentiator is that where most telcos prefer to offer short-term promotions to expand market share, Telkom has been introducing permanent solutions, which he says will be a beneficial strategy in the long run.

"In the broadband market, we should also note that, in reality, nothing is completely uncapped, as FUP [fair usage policy] always kicks in at some point. So this model can work; however, potential abuse must be policed at all times," Mopedi adds.

The new deals do come with a FUP cap, which ranges from 360GB to 6TB per month, depending on the speed package.

"Uncapped offerings are a viable business if implemented properly, and Telkom has indeed proven this already. The operator was the first player in SA to introduce an unlimited calling plan in the voice market, a model that was quickly adopted by its rivals," Mopedi adds.

Last year, Telkom shook up its mobile business with the launch of its FreeMe data-centric packages.

"Unlimited Home extends our commitment to affordability to our fixed-line customers too. We are at the forefront of reducing communication costs and Telkom has taken another big step to making the Internet more accessible," Vitai added.

The FreeMe offering has showed results ? with Telkom gaining significant market share in the mobile space since its release. According to Telkom's integrated report, for the year ended 31 March, its active subscriber base grew by 47.7% to four million during the year. Postpaid subscribers increased 54.5% to 1.2 million, and of these, 13% use FreeMe, of which 79% were new customers.

"The fixed-line business saw good growth in fibre subscribers, which was a combination of migration from ADSL and new customers. Even though we are still experiencing churn in ADSL, this was offset by an increase in demand for higher speeds and more uncapped data," the report said.

As of 31 March, Telkom had approximately three million telephone access lines in service and 1.3 million ports connected via MSAN access.

The new fixed-line and fibre deals include free unlimited anytime Telkom voice calls to over six million Telkom fixed and mobile numbers and discounted calls to the top 30 international destinations. Customers will also receive at least 1GB of free mobile broadband data per month.

From 31 August, existing uncapped customers will automatically be upgraded to the new Unlimited Home Plans at higher speeds. Customers will be upgraded from 2Mbps to 4Mbps and from 4Mbps to 8Mbps or 10Mbps respectively. There have also been significant price reductions to the 20Mbps, 40Mbps and 100Mbps unlimited plans. The FUP has also been improved on most packages and data downloaded between midnight and 7am does not count towards the FUP.

Mopedi says Telkom's move will likely spur other ISPs to show a more agile response and restructure their products.

"My view is that if they don't move to neutralise Telkom, this proactive go-to-market approach adopted by Telkom has the potential to once again re-establish Telkom as a dominant player in the fixed broadband market. I foresee ISPs attempting to diversify their offering further, and will likely introduce more LTE solutions as wholesale providers increase their participation in this space, as well as fibre-based products."