Fixed-line giant Telkom is mulling whether to keep its mobile arm, reports Sunday Times.
The Sunday Times reports Telkom CEO Sipho Maseko says the board is evaluating a number of options around its mobile arm, including whether it is worth keeping it.
Telkom has already announced plans to get rid of the 8ta brand and instead operate as Telkom Mobile. Maseko told the newspaper it is important for the board to "de-risk" its mobile operation. He says this means looking into the intensity of the capital expenditure and operation needs of the mobile company.
Telkom's mobile arm, 8ta, has shown no sign of significant cash inflow after being in operation for almost three years, says the report. Its most recent annual report shows the mobile business has about 4.1 million subscribers, but only 1.5 million of those are active and contributing to revenue, says the paper.
According to the newspaper, Telkom's latest report shows its mobile revenue increased by 22.7% to R1.35 billion, but payments of R2.89 billion were made to other mobile network operators.
Sunday Times spoke to analyst Gregory Cort, who says SA's high mobile termination rates make it difficult for Telkom to compete with the likes of MTN and Vodacom when it comes to voice calls. Cort told the paper there is more scope for Telkom to compete in data, as it has spectrum that other industry players do not have, in the 2 300 MHz range, which he says is ideal for 4G.
Cort tells the newspaper that the business has got good spectrum and towers in all the major metropolitan areas, having arguably the latest radio equipment of all the operators and fibre links in all cases.
He says Telkom could sell off its mobile assets to an international player like Orange Telecom or Bharti Airtel, stopping the current cash outflow and realising something for its investment.
However, Maseko says the mobile business has shown an uptick in recent months, reports the newspaper. He says significant operational improvement can be seen in the last four to five months, with revenues, average revenue per user and subscribers increasing.
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