Fibre broadband: Telkom is ‘not a charity’

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Telkom. (Duncan Alfreds, Fin24)
Telkom. (Duncan Alfreds, Fin24)

Johannesburg - Several Fin24 users say high-speed fibre broadband is only economically sustainable in high-income areas.

Earlier this week, Fin24 reported that Telkom is targeting 25 more areas with its fibre network.

READ: Telkom connects 25 more suburbs to fibre

The roll-out will be completed at the end of September and seeing as the networks will be open access, customers can then choose their own internet service provider.

However, several Fin24 users asked why Telkom targets only wealthy areas like Hyde Park and Bryanston in Johannesburg with its fibre expansion.

READ: Questions over Telkom's choice of fibrehoods

Fin24 users also asked why townships are off the list. The likes of Vumatel also targets wealthier areas such as Parkhurst.

But in response to those views, more Fin24 users have expressed why they think rolling out fibre in wealthier areas is the only way to go, at least at first.

Fin24 user Philip de Weerdt wrote:

“Telkom needs an income (sales) to get a return on investment. Higher income areas are more likely to yield this income. Telkom is not a charity but a business. That is the only sustainable model.”

Fin24 user JJ also wrote:

“If you are an entrepreneur that wants to sell a luxury product that will cost consumers between R1 000- R2 500 per month and is very costly to install and have a long period to pay back your investment, would you first sell this in an area that has a high expected demand or a low expected demand per square metre?  Is there a Luminance store in the areas left out of Telkom's selected areas? Sorry, I can’t give Telkom a red card for the FTTH (fibre to the home) suburb selection.

Fin24 user Magda said:

“Perhaps Telkom lays fibre first in areas where they have the most customers / generate income.”

And finally, Fin24 user Ewaldt wrote:

"Why is it that Telkom is targeting medium and high wealth areas with fibre Links first? To my mind, it is rather straightforward (and this is only my opinion). They are investing in infrastructure, which in this country - due to the rather fantastic value of the rand - comes at a high premium. This means that they want to target the areas where there will be a high rate of technology adoption. Because, fibre as a service, while very cheap, will be charged at a premium until the technology cost has been recovered and a fair (meaning insane) amount of profit has been made. Thereafter, deployment of infrastructure to the lower wealth areas, while probably still be at a loss, due to the infrastructure cost and lower rate of adoption (due to cost considerations)."

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