Telkom has decreased its fixed-line pricing on average by 1.7%, but put up some pricing at a time when the company should be cutting the cost for end-users aggressively to grow penetration, according to an industry analyst.
Earlier this month, the company said it wanted less regulation because that would allow it to offer more competitive pricing and exit areas that do not make any money, but add to its cost base.
On Friday, the company said its customers could “look forward” to an overall tariff decrease of 1.7% on basic voice and data services. The new prices kick in on 1 August and apply to Telkom's tariffs for line rentals, outgoing calls, DSL and data connectivity services.
“Telkom has again ensured that our tariff adjustments are considerate of the consumer price index, effectively offering consumers relief at a time when inflation is at 4.6%,” says senior managing executive for Telkom SA Manelisa Mavuso. Tariffs of almost all post-paid fixed-line calls have dropped, he says.
Mavuso says “we are reducing the tariffs of all long-distance calls, as well as the standard time call charges for local calls. The local per minute call charge in callmore time remains unchanged.”
Telkom will also drop its call tariffs to some of the “popular” international fixed-line destinations, including Australia, China, France, Germany, the UK and the US, it says.
However, the cost of fixed-line rentals has gone up by 5%. Telkom residential customers will pay R139.97 a month, while business customers will pay R191.84. Enterprise customers will not pay a higher rate for primary rate ISDN services.
Closer subscribers will also pay more for the two bottom-end plans, while Closer Three remains unchanged at R333.
Data benefits
Telkom's Faster DSL customers will pay 11.3% less in the monthly rental fees, from R326 to R289 from 1 July. The reduction follows a speed increase from 512kbps to 1Mbps in May. Tariffs for other DSL services are unchanged.
Do Broadband Two and Three customers will receive an additional 1GB for the same monthly cost. Telkom is also introducing a faster DSL, up to 1Mbps, bundled with a 5GB Internet account for R395 a month.
The overall increase on data connectivity tariffs is 2%. However, its mobile arm, 8ta, is offering broadband at about 1c per MB, in celebration of its new 21Mbps network, for a limited time.
Too expensive
“We hope that our customers will appreciate that we have been able to contain tariff increases at a time when the economy is under severe inflationary pressure,” says Mavuso.
Mavuso says its “latest tariff adjustment indicates our drive to bolster our competitive edge while striving to ensure that telecommunications become more affordable and accessible”.
However, Telkom should be dropping prices more in a bid to grow its user base, says Richard Hurst, senior analyst of emerging markets at Ovum. He says the infrastructure investment should have been recouped some time ago.
Telkom recently said its capital expenditure will focus on areas where the company can get the best returns. It will spend 20% to 25% of its revenue on capital expenditure in the new financial year, excluding its investment into 8ta, which will hit R6 billion five years after launch.
Hurst says Telkom is trying to drive more people to use its wireless offerings. He points out Telkom's pricing is at least three times higher than costs in other emerging markets.
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