Productive capital
Performance snapshot
Achievements
FTTH connectivity rate of 51.1%
Launch of Openserve Connect app
Aggressive increase in fibre footprint in latter part of year
Growth in fibre to the base stations
Challenges
Evolution fixed business
Increased competition in fibre broadband
Key strategic
focus areas
focus areas
Scalable
network
Commercialise
the network
Transform
service delivery
COVID-19 impact
Surge in fixed-data consumption
Increased demand to connect to fibre services
Accelerated decline in fixed-voice
The past year was characterised by an ever-increasing demand for connectivity by consumers for whom working and learning from home has become the new norm. Our innovative high-speed broadbandled propositions at attractive price points were the catalyst for our strong results. The Mobile business, now in its 11th year, continued growing, leading with data and disrupting with voice. Telkom Mobile has now become the third largest operator in South Africa, based on service revenue.
Performance overview
The Consumer segment, including Mobile, delivered a 10.1% increase in operating revenue to R25 815 million. This was stimulated by strong data demand in the Mobile business, with service revenue increasing 34.5% to R16 938 million. This includes applications services revenue of R528 million. Fixed-line copper revenue continues to decline due to continued migration to next-generation technologies such as LTE and fibre; however, the rate of decline slowed as the demand for home connectivity increased. To meet this demand, compelling new value offers were created to enable working and learning from home. A strong broadband demand and a prudent cost- containment strategy led to an impressive 90.1% EBITDA improvement to R5 007 million, translating into an EBITDA margin of 19.4% for the Consumer segment.
Mobile EBITDA/margin
R'million
Mobile data revenue
R'million
The SMB component that is under Yep! continues to improve operationally, with measures being implemented to control churn given the challenging economic landscape. Although SMEs have been significantly impacted by lockdown measures, there are some positive results with new customer acquisitions growing.
Mobile service revenue to businesses and public sector entities increased by 31.1% mainly due to work and learn from home. An online marketplace platform was launched and digital services revenue grew by 20%. The platform attracts an average of 337 000 unique visitors per month.
Telkom was named one of the official service providers by National Treasury following a competitive tender process. This contract is awarded for 01 April 2021 to 31 March 2026, and provides the opportunity to service the South African Government with all of its telephone communication needs, including hardware, software and accessories.
Accelerated mobile growth
In an increasingly competitive market, Telkom’s Mobile customer base increased by 27.8% to 15.3 million customers. The overall blended ARPU increased by 15.1% to R104, spurred by an atypical COVID-19 surge. The pre-paid customer base continued its strong growth, expanding by 35.1% to 12.7 million and pre-paid ARPU increased by 17.5% to R77. The challenging economy had an impact on the overall postpaid base, but it remained relatively stable, growing by 0.7% to 2.6 million with an ARPU increase of 12.2% to R211, pointing to a distressed post-paid segment.
As part of Telkom’s COVID-19 commitment, we have undertaken to provide customers with free access to educational content and key information on government websites. More than 185 government websites and educational institutions, as well as COVID-19-specific websites, have been zero rated, removing barriers to access these sites.
Subscriber growth
‘000
Mobile ARPU
Drive high-speed broadband
Our innovative broadband-led offerings catered for the heightened need for data connectivity. The high-speed mobile broadband products available to the pre-paid and post-paid bases at significantly lower entry-level bundles and pricing, made access to home and personal broadband a reality. We saw 41.0% growth in mobile data revenue to R12 211 million, supported by 25.6% growth in mobile broadband subscribers to over 10 million.
Our focus on increasing value-added services to our mobile base was realised through the launch of Telkom’s own videoon- demand platform, TelkomONE, in November 2020. It is a mobile-first proposition, aimed primarily at the underserviced youth market, and is gaining traction. We partnered with the SABC to become the first official streaming video-on-demand service to host SABC TV and radio channels.
Our strategy is to lead on value-based pricing and to grow customer ARPUs through experiential value-rich offerings. Leveraging entertainment streaming applications flanked by SmartHome/Internet of Things will result in a more competitive positioning in the market. These value-rich offerings are also the ideal platform to enable work from home and e-learning applications. Our fixed-line customers benefited from our highspeed broadband unlimited services, which have provided positive traction for new acquisitions and retaining our existing base through attractive price points. Strategic COVID-19 support to the above initiatives was introduced through the launch of the DSL Pure Connect uncapped bundles at promotional pricing, with an entry speed of 5 Mbps at R199 per month. This was coupled with a refreshed FTTH portfolio that features an entry speed starting at 25 Mbps at affordable prices. This addresses the need for fast, reliable high-speed and uncapped fixed-line broadband in the home.
Expand the mobile network
During lockdown, we saw a surge in mobile network traffic due to more people working from home and students studying online. Our mobile traffic grew 53.2% to 942 petabytes. A capital investment of R4 502 million enabled us to carry this significant increase in mobile traffic.
We increased our mobile footprint, increasing our site rollout 9.7% to 6 430. Capacity upgrades, underpinned by the deployment of additional carriers and temporary spectrum, as well as ongoing spectrum refarming, resulted in the upgrade of 2 096 sites with temporary spectrum, 1 971 sites with additional carriers, 1 309 refarmed sites and 804 sites where LTE capability was improved. Our Mobile Network Expansion programme continues, emphasising 4G and deploying temporary spectrum in support of the COVID-19 response.
Telkom has faced major challenges with ongoing high levels of theft and vandalism of equipment. This problem is relevant to all operators and infrastructure providers in the country. Batteries are being targeted due to the ongoing power challenges in the country. Battery theft impacts the network's uptime during load reduction/load shedding and requires ongoing operational management. In FY2021, Telkom managed 2 170 incidents, where 1 351 non-service-affecting sites were repaired, 359 service-affecting sites were repaired and restored, and 129 still partially service-affecting sites were repaired.
Mobile sites integrated
Looking forward
We are continuing with high-speed broadband offerings, lead by LTE and fibre, as part of our innovative and value-rich product suite, to meet the connectivity surge of consumers working and learning from home.
Our Mobile Network Expansion programme will continue, emphasising 4G coupled with a deployed temporary spectrum in support of the COVID-19 response.
Our strategy remains to lead on value-based pricing through experiential value-rich offerings. Leveraging entertainment streaming applications flanked by SmartHome/Internet of Things will result in a more competitive positioning in the market.
10 years in mobile
case study
After enjoying a number of years as the primary provider of connectivity in the country, focused on fixed connectivity, Telkom took on the challenge of democratising mobile communications and launched 8ta in 2010.
In 2016, 8ta rebranded to Telkom Mobile and strengthened its brand positioning as a value for money provider through the launch of FreeMe, a proposition that gave consumers more than what they were used to or expected. This led to Telkom having the fastest growth of data subscribers and an exponential yearon- year subscriber base uptake. The addition of the high-speed broadband solution, SmartBroadband, continues to bolster this growth. From giving customers “more” to enriching their lives and empowering them to “live their Monate”, 10 years later Telkom believes that its broadband-led strategy is exactly what South Africans need to transform their lives.
This data-led commercial strategy has informed Telkom’s network design from inception, driving forward Telkom’s decision to be the first deployer of 4G-based fixed wireless access by utilising the refarmed 2 300 MHz spectrum.
Telkom Mobile has been transformational in driving down the cost of data in South Africa by providing value-rich broadband products and services to customers. Our focus right from the start was to connect radio sites with fibre backhaul where possible, and this strategy has paid off, providing flexibility in backhaul that helped support COVID-19-related traffic spikes. Telkom has already decommissioned 70% of the legacy 2G network, and with its focus on significant 4G and 4.5G (LTE-A) deployments, enabled by fibre, is set to harness 5G and future generations.
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