Telkom’s consumer business, which houses Telkom Mobile, has the potential to make its mark in the highly competitive telecommunications industry by offering services in neglected rural areas.
Led by CEO Lunga Siyo, the consumer business — with its strategic pivot towards infrastructure — is poised for unprecedented growth.
The strategy leverages Telkom’s extensive infrastructure capabilities to meet the demand for flexible, customer-orientated services. In that regard, the company aims to double down on its mobile, fibre, data centre, marine cables and satellite infrastructure provision businesses.
The consumer business has a significant advantage with Openserve’s 170,000km fibre network, which reaches most parts of the country.
Mobile broadband subscribers increased 9.5% to 12.7-million in the 2024 financial year, representing 62.3% of Telkom Mobile’s total 20.4-million subscriber base. The company already has 7,738 mobile integrated sites, of which 66% have fibre backhaul.
Siyo has a unique opportunity to deploy prepaid fibre services to rural consumers, villages and areas neglected by Vodacom and MTN. Through prepaid fibre, areas such as Phokeng in the North West, Ngcobo in the Eastern Cape and Elim in Limpopo are fertile grounds for Telkom to cultivate and attract new customers.
By leveraging its extensive infrastructure capabilities, Siyo can position the company ahead of its competitors in these regions. However, he must use the fibre backhaul to deliver prepaid fibre in SA’s rural areas and villages.
Another advantage is that the fibre network’s wide reach will be crucial in the battle for 5G dominance in SA. Telkom already has 465 active 5G sites.
The evolution of prepaid and fibre services is central to Telkom’s strategy. By offering prepaid fixed broadband options starting at R99 for seven days, it is meeting customer needs for flexibility while expanding its market share.
The division aims to grow its top-line revenue to R32bn within five years. Mobile revenue is projected to hit R27bn and mobile earnings before interest, tax, depreciation and amortisation (ebitda) is expected to reach R7.7bn. Its growth strategy includes spectrum acquisition, regionalisation, data science, digital transformation and an efficient distribution network.
The company is seeing rewards from its personalised pricing plans such as Mo’Nice, which accounted for more than 50% of monthly prepaid revenue. To cater to the micro-purchase behaviour prevalent in the prepaid segment, Telkom has expanded its offering with propositions orientated to the youth and mass market, including TikTok and WhatsApp bundles.
Telkom is also exploring opportunities beyond connectivity. Initiatives such as Telkom Plus, the launch of Prime Video and plans for further digital content offerings, such as Netflix and Showmax, are poised to seize the over-the-top opportunity.
Expansion into e-commerce, home security, financial services, and healthcare emphasises Telkom’s ambition to diversify its revenue streams.
The R4.3bn mobile virtual network operator market and the booming R30bn internet service provider market represent significant opportunities.
The consumer division aims to grow revenue by 8% annually to reach R2bn by 2027 through ventures such as insurance and value-added services. The company’s success in device insurance, through which it serves about 1% of its customer base, highlights substantial growth potential. With 161,612 device policies generating R284.5m in revenue, there is room for Telkom to sign up more customers and emulate the successes of Vodacom and MTN, which have significantly higher penetration in this market.
Telkom remains committed to the continued adoption of airtime lending, a service business segment representing 31.3% of total prepaid recharges. About 7.2-million unique customers leveraged this offering in the full year.
The focus on customer-centric services, expansion into new business lines, and leveraging data science and digital transformation can drive growth.
As Siyo continues to explore and expand Telkom’s infrastructure strategy, it becomes increasingly clear that he is sitting on a gold mine, poised to unlock substantial value for the company and its stakeholders.
An infrastructure-focused model will ensure that the division can provide high-quality, reliable services, handle growing traffic demands, achieve cost efficiencies and maintain a competitive edge in the market.
It appears that Telkom’s infrastructure-focused model is characterised by substantial investments in network infrastructure, integrated service offerings, wholesale services, technological advancements, a customer-centric approach, cost efficiency and focus on rural connectivity.
This model not only enhances the group’s competitiveness but also adopts a customer-centric approach by ensuring high-quality, reliable services with better control over network performance.
Using the infrastructure-led model, Telkom Mobile can continue to be a star performer for the group, with significant, untapped potential.
• Lourie is founder and editor of TechFinancials.
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