Telkom looks to survival

By Christelle du Toit for Telkom
Johannesburg, 04 Mar 2008

Fixed-line operator Telkom's move into content provision is part of a survival strategy.

This is the view of David Moore, media analyst with Africa Analysis, who was commenting on Telkom's recent decision to introduce more content through its "do Broadband" product offering.

Moore says: "Telkom is seeing its own revenue from traditional voice telephony falling and the number of installed fixed-lines is showing marginal decline. As such, it is seeking new avenues of revenues."

He says telecommunications companies internationally are moving into content provision as their average revenue per user is dropping significantly.

"Since they already own a substantial national transmission network, it makes sense for them to go into areas that will make use of their existing infrastructure."

In Telkom's case, Moore quotes the provision of a local music show on the "do Broadband" site, as well as the creation of Telkom Media, as examples of Telkom trying to re-invent itself.

"They will eventually bundle pay-TV with their phone and broadband products," he adds. "If Telkom ever manages to sell Vodacom and launch its own mobile offering - or buy some other mobile operator - it will be able to offer quad-play, which is triple play that includes mobile telephony."

However, Moore points out that these strategies are not going to pay off immediately. "Telkom Media is only expected to become cash-positive in five to seven years, showing a return on investment in around 10 years."

Telkom did not want to comment on its content offerings, but is on record as saying it is revisiting its mobile strategy.