Telkom slips in homes

By Kimberly Guest for Telkom
Johannesburg, 31 Oct 2007

Telkom`s provision of fixed-line telephony services to consumers has dipped since 2001.

In Statistics SA`s 2001 census, it was established that 24.4% of households had a landline telephone. Six years later, the government agency`s Community Survey has found this has slipped almost 25% to 18.6% of households.

Conversely, cellphone adoption has risen 126% from 32.3% of households in 2001, to 72.9% in 2007. Stats SA attributes the decline in landline telephony to the popularity of cellphones.

Telkom group executive of corporate communications Lulu Letlape says the popularity of cellular technology has also knocked the company`s revenue.

"In the year ended 31 March, Telkom`s traffic revenue decreased by 4.7%. This was primarily as a result of the increasing substitution of calls placed using mobile services rather than fixed-line services," she says.

Expensive alternative

Steven Ambrose, MD of World Wide Worx Strategy, says the decline has also been driven by affordability.

"Fixed-line telephony has been affected by the cost of rentals and calls. These have not gone down in the last few years and few of our communities are able to afford the costs. Cellphones, on the other hand, are easily available, convenient and increasingly more cost-effective as prices continue to drop," he explains.

Ambrose points out that Telkom has contributed to a portion of the decline.

"It`s not just people cancelling their service, it`s Telkom disconnecting lines as well due to unpaid bills. As part of their exclusivity agreement, Telkom had to roll-out a million phone lines. They did this, but only to make the numbers, rather than looking at sustainability. So, many of the people who got landlines simply couldn`t afford them."

He adds: "Our research shows that fixed-line telephony penetration is continuing to decline. Our view is this will continue until the local loop is unbundled."

Connecting societies

Of the seven household goods categories to be measured in the 2007 Community Survey, only landline telephony has lost ground. Cellphone, radio, computer, fridge and television take-up have all increased.

The remaining indicator, Internet facilities, was not measured in 2001 and so a comparison is not available.

According to the results of the survey, 15.7% of South African households now have a computer in the home. This is up 83% from 2001.

Entering the category for the first time, the survey found that 7.3% of households have Internet access at home.