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Telkom’s interim results for the six months ended September 30, 2020 revealed what most people expected: a large decline in fixed line subscribers.
The company’s fixed line subscribers fell from 1,975,000 in September 2019 to 1,432,000 in September 2020.
This means that Telkom lost 543,000 fixed line subscribers year-on-year, equivalent to a 27.5% decrease in its fixed access line customer base.
The latest drop follows a trend that began 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 fiber, but this was not enough to stop losses.
Many Telkom subscribers abandoned their fixed line services and migrated to competitors such as Vumatel, Vodacom, MTN and Rain.
While copper theft was to blame for some of the losses, Telkom was its worst enemy in many cases.
The company’s poor customer service and billing problems caused tremendous frustration among its users, prompting them to seek alternatives.
Telkom, however, attributed the drop to factors beyond its control, such as competition from mobile services, copper theft and difficult economic conditions.
The operator has also started proactively replacing its copper clients with fixed LTE, a strategy that is paying dividends.
The decline in fixed lines can be expected to continue, as Telkom plans to stop providing copper-based services entirely by 2024.
Telkom CEO Sipho Maseko said it was necessary to phase out copper because maintaining multiple cable network technologies is expensive and experience in copper networks is dwindling.
Interestingly, the COVID-19 pandemic has delayed Telkom’s plan to dismantle its copper network.
It has created an immediate strong demand for broadband access, and the company’s fiber network cannot meet this demand.
Openserve, Telkom’s wholesale arm, is now using its copper network to meet this demand in the short term.
However, the company said it will continue its decommissioning strategy in places where copper is not “economically viable.”
Copper used to rule until fiber, LTE and 5G came along
For more than a decade, Telkom ADSL was the only game in town for most South Africans seeking affordable, unlimited broadband access.
Sentech’s MyWireless and WBS iBurst wireless products provided some competition for Telkom in select areas in the mid-2000s, but ADSL remained the preferred choice.
Things started to change when Vumatel launched affordable fiber access at Parkhurst in October 2014.
Vumatel proved it was possible to outperform Telkom in the landline market, sparking a fiber revolution in South Africa.
Many other fiber network operators, including Frogfoot, Octotel, Cybersmart, Vodacom, MTN, and SADV, followed Vumatel’s lead and began rolling out fiber across the country.
Telkom was on the defensive and many households and businesses abandoned their ADSL line for fiber for home and fiber for business.
Improvements in mobile technologies, which made it possible to offer fast and affordable fixed wireless broadband access, emerged as another major competitor to ADSL.
In recent years, MTN, Vodacom, Cell C, Telkom, and Rain have launched fixed LTE and 5G products at competitive prices.
Telkom even proactively moved many of its ADSL subscribers to its new fixed LTE products in many areas.
Both wireless and fiber access provide higher speeds at lower prices than ADSL, which means that DSL is considered old and tired technology that 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.
Telkom landline decline
The following table provides an overview of Telkom’s landline subscriber numbers since 1993.
| Telkom landlines | ||
|---|---|---|
| Date | Subscribers | YoY change |
| 1993 | 3,458,000 | – |
| 1994 | 3,594,000 | +136,000 |
| nineteen ninety five | 3,773,000 | +179,000 |
| nineteen ninety six | 3,926,000 | +153,000 |
| 1997 | 4,259,000 | +333,000 |
| 1998 | 4,645,000 | +386,000 |
| 1999 | 5,075,000 | +430,000 |
| 2000 | 5,493,000 | +418,000 |
| 2001 | 4,962,000 | -531,000 |
| Mar-02 | 4,924,000 | -38,000 |
| Mar-03 | 4,844,000 | -80,000 |
| Sep-03 | 4,812,000 | – |
| Mar-04 | 4,821,000 | -23,000 |
| Sep-04 | 4,870,000 | 58,000 |
| Mar-05 | 4,726,000 | -95,000 |
| September-05 | 4,730,000 | -140,000 |
| Mar-06 | 4,708,000 | -18,000 |
| Sep-06 | 4,675,000 | -55,000 |
| Mar-07 | 4,642,000 | -66,000 |
| September-07 | 4,621,000 | -54,000 |
| Mar-08 | 4,532,000 | -110,000 |
| Sep-08 | 4,504,000 | -117,000 |
| Mar-09 | 4,451,000 | -81,000 |
| September 09 | 4,398,000 | -106,000 |
| Mar-10 | 4,273,000 | -178,000 |
| September, 10th | 4,234,000 | -164,000 |
| Mar-11 | 4,152,000 | -121,000 |
| 11 of September | 4,073,000 | -161,000 |
| Mar-12 | 3,995,000 | -157,000 |
| September 12 | 3,894,000 | -179,000 |
| Mar-13 | 3,800,000 | -195,000 |
| September 13th | 3,713,000 | -181,000 |
| Mar-14 | 3,618,000 | -182,000 |
| Sep 14 | 3,531,000 | -182,000 |
| Mar-15 | 3,439,000 | -179,000 |
| September 15 | 3,323,000 | -208,000 |
| Mar-16 | 3,217,000 | -222,000 |
| 16 of September | 3,090,000 | -233,000 |
| Mar-17 | 2,954,000 | -263,000 |
| September, 17th | 2,840,000 | -250,000 |
| Mar-18 | 2,678,000 | -276,000 |
| September 18 | 2,566,000 | -274,000 |
| Mar-19 | 2,267,000 | -411,000 |
| September 19th | 1,975,000 | -591,000 |
| Mar-20 | 1,602,000 | -665,000 |
| September 20 | 1,432,000 | -543,000 |
Telkom Fixed Line Chart
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