Telkom feels the heat from fibre competitors

Johannesburg - Group chief executive officer of Telkom, Sipho Maseko, has said smaller fibre providers are placing “relentless pressure” on the company’s wholesale and networks unit.

This is according to an excerpt from Maseko’s strategic review in Telkom’s integrated report for 2015, which was released this month.

In the report, Maseko said that Telkom’s wholesale and networks segment of the business “endured a very tough time over the past 12 months”.

“This includes the relentless pressure from smaller providers of fibre, who are far nimbler than we have been, cherry-picking the suburbs they want to service.

“As the leading manager of a wide infrastructure network Telkom’s response to this type of competition needs to be carefully thought through,” Maseko added.

Maseko’s comments refer to smaller local fibre players such as Vumatel and Fibrehoods that have been installing infrastructure in some of South Africa’s suburbs to supply high speed internet services.

This month alone, Vumatel announced that Johannesburg suburbs Victory Park, Linden, Bryanston South and Blairgowrie are set to join Killarney, Riviera, Saxonwold, Parkwood, Parkhurst, Greenside and Parktown North with its fibre internet services.

Vumatel also builds open networks, meaning that consumers have more choice when it comes to choosing their own internet service provider.

Meanwhile, another company called Fibrehoods is also rolling out "aerial" fibre networks across Johannesburg in suburbs such as Craighall, Craighall Park, Winston Ridge, Atholl, Inanda, Illovo, Elton Hill and Dunkeld.

In the Western Cape, Constantia is also rolling out a fibre network that is separate to Telkom.

And at Telkom’s annual results briefing in Johannesburg in June, Maseko said that there are now about 25 fibre broadband infrastructure providers in SA.

“So it is getting tough out there,” Maseko told attendees at the annual results briefing in June.

“As a company we need to make the right response.

“Clearly, we’re being attacked from all fronts,” said Maseko.

READ: Telkom CEO: It's game on in SA fibre market

Telkom, though, is also focused on its own fibre-to-the-home deployment as the company is seeking to connect the likes of Houghton, Parktown and Westcliff in Johannesburg.

And in its 2015 integrated report, Telkom said that it’s upgrading its infrastructure by introducing 20, 40 and 100mbps (megabits per second) wholesale fibre broadband in selected areas while also passing 1 030 519 homes fibre to the curb technology.

The wholesale unit at Telkom has also introduced price reductions this year.

“We need to make sure our network is future-proof,” Maseko added in the note of the 2015 integrated report.

“We can expect usage to follow global trends where 60 to 70% of the usage of networks like ours is for internet or streaming purpose,” he said.

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