Telkom’s interim results for the six months ended 30 September 2020 revealed what most people expected – a big decline in fixed-line subscribers.
The company’s fixed-line subscribers dropped from 1 975 000 in September 2019 to 1 432 000 in September 2020.
This means Telkom lost 543 000 fixed-line subscribers year-on-year, which equates to a 27.5% decline in its fixed-access line customer base.
The latest decline follows a trend which started in 2001 when the company lost 531,000 subscribers from its peak of 5,493,000 fixed-line users in 2000.
Over the past two decades, Telkom launched numerous new fixed-line products, including ADSL, VDSL, and fibre, but this was not enough to stem the losses.
Many Telkom subscribers dumped their fixed-line services and migrated to competitors like Vumatel, Vodacom, MTN, and Rain.
While copper theft was to blame for some of the losses, Telkom was its own worst enemy in many cases.
The company’s poor customer service and billing problems caused tremendous frustration among its users, which prompted them to look for alternatives.
Telkom, however, put the decline down to factors outside of its control like competition from mobile services, copper theft, and tough economic conditions.
The operator has also proactively started to replace its copper-based clients to fixed-LTE – a strategy which is paying dividends.
The decline in fixed-lines can be expected to continue as Telkom is planning to stop providing copper-based services altogether by 2024.
Telkom CEO Sipho Maseko said phasing out copper was needed because maintaining multiple cable network technologies is costly, and expertise on copper networks is dwindling.
Curiously the COVID-19 pandemic has slowed Telkom’s plan to decommission its copper network.
It has created an immediate strong demand for broadband access, and the company’s fibre network is not able to meet this demand.
Telkom’s wholesale arm Openserve is now using its copper network to satisfy this demand in the short term.
The company did, however, say it will continue its decommissioning strategy in locations where copper is not “economically viable”.
Copper used to rule until fibre, LTE, and 5G arrived
For over a decade, Telkom’s ADSL was the only game in town for most South Africans who were looking for affordable, uncapped broadband access.
Sentech’s MyWireless and WBS’s iBurst wireless products provided some competition to Telkom in selected areas in the mid-2000s, but ADSL remained the preferred choice.
Things started to change when Vumatel launched affordable fibre access in Parkhurst in October 2014.
Vumatel showed it was possible to take on and beat Telkom in the fixed-line market, which sparked a fibre revolution in South Africa.
Many other fibre network operators, like Frogfoot, Octotel, Cybersmart, Vodacom, MTN, and SADV, followed Vumatel’s example and started to roll out fibre across the country.
Telkom was on the back foot, and many households and businesses dumped their ADSL line for fibre-to-the-home and fibre-to-the-business.
Improvements in mobile technologies, which made it possible to offer fast and affordable fixed-wireless broadband access, emerged as another big competitor to ADSL.
Over the last few years MTN, Vodacom, Cell C, Telkom, and Rain launched competitively priced fixed-LTE and 5G products.
Telkom even proactively moved many of its ADSL subscribers to its new fixed-LTE products in many areas.
Both fibre and wireless access provide higher speeds at lower prices than ADSL, which means DSL is seen as old and tired technology which should only be used as a last resort.
The effect was a rapid decline in copper lines as ADSL and VDSL subscribers migrated to these new technologies.