Telkom CDMA a go

By Staff Writer for Telkom
Johannesburg, 31 Oct 2008

Telkom entered the wireless CDMA market yesterday with the release of its trial W-CDMA service.

Telkom's decision to move towards a wireless solution was prompted by both the possible sale of its mobile arm, Vodacom, and its large financial losses from copper cable theft.

In Telkom's annual financial report, Reuben September said the company's shareholder agreement with British operator Vodafone “has prevented Telkom from entering into the mobile markets” to the extent it has wanted to.

“The discussion(s) with Vodafone, regarding the sale of our 50% stake in Vodacom, is intended to remove this impediment, as we are determined to put ourselves in a position where we can forcefully drive the creation of value for our shareholders,” he added.

The company first announced it would move to wireless in June this year, after it had lost R571 million to cable theft. At the time, Telkom chief of global operations Thami Msimango said: “We decided to fill the hole using wireless CDMA technology. Our network costs can not withstand the high levels of theft.”

To fill the gap, the utility hired Chinese telecoms vendor Huawei Technologies to roll-out its multimillion-rand fixed wireless (W-CDMA) network. Telkom will reportedly spend R1.7 billion on the network, over a three-year period, with an internal rate of return of over 20%.

Cost and competition

The company released the details of the trial service which is expected to run until the end of November. According to the company, there are just over 38 base stations within the Gauteng metropolitan areas. “Telkom will exponentially increase network coverage over the next few months.”

Coverage areas lie primarily in the Johannesburg eastern areas; Pretoria, from Lukasrand to Cosmos; and in Vereeniging, in Langerand. Telkom says the network is currently built on the 3G technology, W-CDMA, which supports services such as high-speed Internet access, video and high quality voice transmission.

While Telkom previously stated that the W-CDMA services are not intended to compete with the mobile operators, the costs of the services are competitive. The company may well also be responding to competition from the second national operator, Neotel, which has used the technology as a last mile since its launch.

Cost table

The company charges a minimum of 1c for short sessions (less than 100Kb) and all data rates exclude modem costs.

Consumers can buy one of two CDMA devices manufactured by Huawei and each can be bought outright, or over a contract period of up to two years.