Telkom, which is looking to cut 15% of its workforce to cut costs and retain more of its earnings, will hike prices of telecoms offerings, the group said on Wednesday.
The group, headed by CEO Serame Taukobong, is searching for cash. The fixed-line operator said rising costs forced it to push up tariffs.
“With an inflation rate sitting at a record 13-year high, price increases are necessary and unavoidable to ensure long-term business sustainability. Like many other SA companies and enterprises, Telkom has been impacted by the pressures driven by prevailing macroeconomic dynamics,” it said.
Price increases from May apply to fixed voice, ADSL, fibre to the home and mobile, affecting individual consumers and small and medium businesses.
Telkom’s older or legacy businesses in voice and internet access will push prices up an average of 8%.
Fibre-to-the-home products will increase an average of 11% overall. The company said this is mainly due to a fees increase by its wholesale network operator Openserve. But the company promised price increases will come with faster internet speeds for customers.
Mobile pricing is a little more complex for SA’s third-largest cellphone provider, with certain SmartBroadband data prices set to rise 5% in monthly subscription costs.
Several data bundles and out-of-bundle rates for mobile voice, SMS and data services will result in an increase in most tariffs. Voice rates for out-of-bundle consumption will rise increase from R0.75 to R0.80 per minute and data rates will increase from R0.32 to R0.35 per MB of data on most plans.
Telkom now has more than 18-million mobile customers.
Lunga Siyo, CEO of Telkom Consumer and Small Business, said: “The country’s economic challenges, including rising inflation, have made it necessary for Telkom to adjust prices to maintain the high level of service our customers have come to expect. The price increase also comes with continued improvement of our products even in challenging times.
“We understand that price increases are never easy, and we want to assure our customers that we have done everything possible to minimise the impact on them.”
The partially state-owned operator announced a raft of cost-cutting measures as it reported earnings for the third quarter to end-December. The group’s profitability has been hit by rising living costs, which have lowered demand for some products, while consumers have had to bear the increased operating costs due to ongoing power cuts in the country.
Telkom’s overall performance continues to be hit by the group’s migration from the legacy and voice revenue businesses, which have been declining in recent years as people favour newer technologies such as fibre.
However, these new technologies come with lower margins for Telkom, resulting in more pressure on earnings.
The company launched a frenzied scramble for cash in February, unveiling plans to slash as many as 1,770 jobs and to sell its device credit book for R1bn as rolling power cuts and heavy spending on the mobile network jacked up costs and eroded its profitability.
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