Telkom is unfazed by its competitors’ introducing new prices in a bid to woo customers, as the listed company is confident it will maintain its position and extend its growth in the mobile prepaid segment.
The telecoms operator has recorded 12 consecutive quarters of mobile revenue growth, while rivals Vodacom and MTN have struggled in the prepaid segment — especially voice — prompting them to launch new price offerings to lure customers.
Telkom Group CEO Serame Taukobong said competitors have been responding in various ways, yet despite that, they have seen 12 consecutive quarters of service revenue growth way ahead of the market. ”So, we are prepared.”
He said Telkom was “extremely” strong in the prepaid market, where consumers were spending small amounts to buy data bundles, either hourly, daily, or weekly. “That’s the prepaid market; it has not changed. People are still buying R5, R10 bundles. So when you’re responding with high-priced bundles, that’s not competition ...
We’ve got the right data propositions and the right affordable price points for that market, which competition cannot beat. So, when you say you’re going to respond with high-value, high-priced bundles, you’ve totally missed the market.
— Serame Taukobong, Telkom Group CEO
“We’ve got the right data propositions and the right affordable price points for that market, which competition cannot beat. So, when you say you’re going to respond with high-value, high-priced bundles, you’ve totally missed the market,” Taukobong said in an interview.
Telkom’s total mobile subscriber base grew by 7.7% to 24.5-million in the six months to September. It maintained its postpaid or contract customers at 3-million, while the prepaid segment grew 9% to 21.6-million.
Its mobile data subscriber base rose 26.7% to 18.5-million, representing 75.3% of the total mobile subscriber base. “This growth was driven by strong demand for seamless connectivity and value-focused plans tailored to our customers’ needs,” said Telkom.
Mobile data revenue rose by 10.3% to R8.6bn. “We’re seeing sustained demand for broadband, driven by increased digital adoption, the need for mobility, and broader affordability of devices and data access.”
The expansion of the super-fast LTE network, prepaid bundle innovation, and hyper-localised campaigns were some of the activities that had allowed Telkom to “unlock growth in underserved areas, while defending our market share in more saturated markets”, the group said in a statement.
Taukobong said: “We look at areas where we’ve got capacity; we match that capacity with the right price points, and we use our CVM [customer value management] engine and very smart data analytics to grow market share.”
He said the company’s data-led propositions were where it was winning. “The past five years have shown nine million prepaid subscriber growth, and we will continue driving that because we’re punching tactically in regions where we have strength and continue to do so.”
Telkom group revenue rose 3.4% to R22.1bn, driven by robust mobile and fibre-related data revenue growth. Group data rose 7.9% to R13.1bn and contributed 59.1% to total revenue. Telkom’s fibre infrastructure subsidiary Openserve grew its overall revenue by 2.7% to R6.3bn, lifted by growth in the enterprise, carrier services, and broadband segments.
Fibre-related data revenue increased by 10.1% to R5bn. Openserve fibre had passed the 1.5-million-homes mark, an increase of 163,348.
“The engine room behind the data thrust is the strength of Openserve ... We ‘ve been building fibre for the past 30 years, [replacing] all the legacy copper with fibre, and that’s what’s giving us the tactical edge, because data needs lots of strong fibre backbone,” said Taukobong.
Telkom’s information and technology business BCX had improved its performance in the second quarter, though revenue growth in key segments remained subdued. This was due to tough market conditions as clients prioritised cost containment, leading to delays in non-essential tech investments — a trend that was increasingly evident across the sector.
A few years ago, Telkom was planning to sell a stake in the business, but that was halted to focus on stabilising it. “What’s important for us is we have to make sure that it’s the best of BCX, and that’s why we’ve said what’s key is to focus on a structured cost optimisation programme in the right levels,” said Taukobong.
“[And to] make sure that we’re focusing on the right revenue mix. Because you can’t even get to a proposition of considering an external party or strategic exit when we’re not at the optimum levels — and we’re not there yet."
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