Telkom has been insulated from reality for so long that any competitive instincts it possessed have long since atrophied. Its ill-fated venture into mobile telephony and data is an amusing case in point. Launched in 2010, its mobile network has stalled at 1.5-million subscribers and continues to bleed billions of rands a year. In a classic case of shooting the messenger, it has abandoned the original 8ta brand in favour of the dubiously generic "Telkom Mobile".
So embarrassing are these numbers that Telkom has stopped separating out its mobile operations in its financial statements. And now Telkom's last refuge, the "local loop", is about to be unbundled. This network of copper cables, spread throughout South Africa, is what you use when you phone someone on a landline or connect to ADSL. It is the only network over which Telkom still has an absolute monopoly. The unbundling process will force Telkom to allow competitors to use the network at reasonable rates.
Local loop unbundling has been delayed countless times since 2006, but it may finally be under way. Icasa has submitted its draft regulations to Yunus Carrim, the new communications minister, and if all goes according to plan, the draft will be approved within a fortnight. That may be wishful thinking, but even a further year of delay is not enough time for Telkom to prepare for the disruption of unbundling. It made over R10-billion from data in the past financial year – nearly 30% of its total revenue. It will not be able to sustain such revenues when it has to compete for customers in the open market.
To their credit, Telkom's new leaders do seem to recognise the need for change. If they hope to keep the company afloat while their legacy businesses die, they will need to cuddle up to wholesale data customers such as internet service Telkom, they will jump at the chance.
Telkom may not realise it, but millions of South Africans loathe its brand and everything for which it stands. If its leaders are truly sorry, then they should put their money where their mouths are. For starters, they could unbundle the local loop without any further fuss, drop interconnect fees and reduce line rentals. Nothing says "I'm sorry" like positive actions.providers (ISPs). Considering they have been fighting those same customers in court for the better part of a decade, this realisation is long overdue. And they had better hurry. As the penetration of fibre optic networks increases, Telkom is in real danger of being cut out of the market completely. Fibre is faster, cheaper to maintain and, unlike copper, does not get stolen for scrap. If ISPs and other service providers can connect directly to customers without going through
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Originally Posted by ians
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