Tough times, tough luck

ADSL South Africa (Broadband South Africa), 14 July 2007

It was made clear in an article in Finweek that the next 12-18 months ‘…are going to be especially challenging for Telkom’ (Telkom set for the hard slog, Finweek, Ben Kelly, 4 July 2007).

ADSL South Africa (Broadband South Africa) certainly hopes it will be the case. We’re sure many disgruntled South African consumers are longing for the day Telkom is severely punished for the commercial crimes they have committed in terms of price fixing, et cetera against the people of South Africa. Telkom certainly needs to learn the meaning of Batho Pele. It’s all about putting people first and not one’s lust after ill-gotten gains.

Are there any signs that Telkom is already taking some pain?

Yes.

‘Acting CEO Ruben September says that over its past financial year Telkom has been experiencing pressure on its pricing and that's going to become more intense in the future as second fixed line operator Neotel starts to ramp up its offerings and new entrants begin to take it on in areas previously Telkom's sole domain’ (Telkom set for the hard slog, Finweek, Ben Kelly, 4 July 2007).

In other words, Telkom is already experiencing downward pressure on profit margins, and things are going to heat up even more as Neotel’s (SNO) rollout build up steam and other players move in for the kill.

What’s probably the biggest threat Telkom is facing?

The biggest threat to Telkom’s future is probably a decline in traditional fixed line services.

‘‘One key issue is that traditional voice services are a dying product. The start of that trend is shown by figures published by Telkom that showed that revenues from both fixed line and call volumes were declining’ (Telkom set for the hard slog, Finweek, Ben Kelly, 4 July 2007).

In other words, Telkom needs to look pass traditional fixed line services in order to survive.

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