South Africa’s fixed line incumbent Telkom is questioning whether it is in a position to build a significant mobile presence again, having virtually exited this space when it sold its stake in Vodacom to Vodafone, leaving just a fledgling cellular unit.
The company said it was ‘continuing to explore all avenues to de-risk the mobile business’, following a trend for operators worldwide to add wireless assets where they have only wires (or to invest in fiber and cable where they are mobile-only). The need to boost ARPU and customer control via bundled services and quad play is driving this, but Telkom CEO Sipho Maseko still has reservations as he reports increased losses in the small wireless unit. He said the firm was examining various options, while not specifying what they were ‘ some analysts believe Telkom will sell the business and rely on MVNOs in future. In a presentation following its half-year results, the operator said its priority was to ‘remove uncertainty and curtail future opex and capex’ in the mobile unit.
Telkom was previously a partner in Vodacom, which is now controlled by Vodafone, but is now the smallest player in South Africa, behind Vodacom itself, MTN and Cell C. Telkom’s mobile business suffered negative EBITDA of ZAR773m ($76.5m) in the first half of the 2014 financial year, an 8% year-on-year decline, though mobile revenue was up 55.4% to ZAR926m, driven by a heavily data-driven strategy. Telkom intends to continue its data-centric approach, having seen falling revenue and ARPU from voice and hybrid services, and it is investing in LTE infrastructure.