Telkom to put more money into fledging mobile business

Read time 3min 10sec
Serame Taukobong, CEO of Telkom Consumer.
Serame Taukobong, CEO of Telkom Consumer.

SA’s smallest mobile operator Telkom is looking to maintain its growth trajectory to take on the duopoly Vodacom and MTN.

So said Serame Taukobong, CEO of Telkom Consumer, in an e-mail interview with ITWeb.

Telkom is aggressively pushing its mobile business segment, as it is faced with a massive decline in traditional fixed-line revenue.

The telecommunications company, in its annual results for the year ended 31 March, posted R43 billion revenue, largely spurred by its mobile business segment.

In the results, Telkom reported a 24% surge in mobile customers to 12 million, while mobile data traffic went up 70%.

“The mobile business grew 54.4% in service revenue from a higher base to R12.6 billion, to remain the fastest growing mobile business in South Africa with 12 million customers,” said group CEO Sipho Maseko during the results announcement.

He noted that despite ongoing competitive threats with changes implemented by competitors in the mobile space, Telkom is pinning its hopes on its broadband-led propositions to gain market share.

“The mobile business remains profitable, with its EBITDA [earnings before interest, taxes, depreciation and amortisation] margin improving from 1.4% to 14.9% over the past three years,” Maseko said.

Taukobong explains that the growth of Telkom’s mobile business is as a direct result of the company’s ongoing network investment.

According to Taukobong, it will invest 16% to 19% of its revenue into the mobile business.

However, he points out that scale is a challenge for Telkom’s mobile business. “One cannot underestimate the size of our competitors, and, as such, we are constantly exploring opportunities to leverage off their strengths.”

He notes one such investment is the infrastructure sharing (roaming) agreement signed with Vodacom in 2019 to improve the customer experience on the Telkom network.

“This roaming agreement provides us with access to a national footprint and that has been key in the growth of our subscribers due to more people being able to access our network.”

Vodacom and Telkom concluded a long-term, multibillion-rand agreement, whereby Telkom obtained roaming and facilities leasing services from Vodacom with full effect from June 2019.

The terms of the agreement allow Telkom customers to roam on Vodacom’s 2G, 3G and 4G networks, with the added benefit of seamless handover technology.

“We are still South Africa’s smallest mobile operator when it comes to customers but its growth trajectory over the past three to four years has been huge,” Taukobong says.

“We would like to continue with this growth trajectory; however, with the current challenging operating environment as customers remain under pressure from the effects of the COVID-19 pandemic, our goal is to retain our customer subscription base,” he notes.

On the opportunities the company sees in the South African market, Taukobong says: “The COVID-19 pandemic has forced us, as a country, to rapidly address the digital divide and fourth industrial revolution, as many South Africans are now working and learning from home as a result of the lockdown phases.”

He adds there has been soaring data demand from consumers to enable them to work, learn and entertain from home uninterrupted.

“Now, more than ever, data is a lifeline for many. As more people turn to online services during this unprecedented time, there is a growing need for ICT companies to provide affordable broadband propositions in response to this increase in demand.”

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