Telkom is planning to repurpose some of its legacy copper infrastructure as it shifts focus to next-generation technologies.
So said Sipho Maseko, Telkom group CEO, in an interview with ITWeb, following the company’s announcement of its financial results for the year to 31 March.
The telco this week posted strong results, as it saw revenue from next-generation technologies surge, to now make up the lion’s share of its income.
Telkom is in the process of moving away from legacy infrastructure like copper as it digitises its network.
The operator now has about 1.3 million subscribers still using the old copper technology, a 20% decline in comparison with the previous year.
Over the past couple of years, Telkom unit Openserve has been involved in a network modernisation process.
The company has also lamented the huge costs of maintaining its legacy network, which has been targeted by thieves and vandals.
“The business that has been in decline is the legacy copper business,” says Maseko.
Overhead fibre plans
However, he says most of that infrastructure is reusable. “For instance, we can use the poles for overhead fibre. So the re-usability of that infrastructure is quite high. We are also able to reuse the ducts as well as the manholes.
“For us, the main reason we will be able to deploy our fibre more efficiently is because we have got that infrastructure that is already there. We just need to get the pole up straight instead of bending.”
Although Maseko admits some of this infrastructure is not reusable, he believes it will give Telkom an advantage in the roll-out of next-generation technologies.
On the fibre front, Maseko says Telkom embraces the stiff competition in the market.
“The competition in the fibre market is very intense but the competition is good. We have evolved as a company in such a way that competition is not a problem. Competition makes you better, as we learn from it and improve.
“We have seen that competition has been very fierce and we no longer have a monopoly in Telkom or Openserve in the fixed-line area. That’s the dynamism we are looking for in the mobile business as well. So there is a lot of competition and it is good competition in that it’s bringing prices down, giving customers choice and improving the quality of services.”
As fibre competition in the South African market escalates, industry players believe there will be an eventual consolidation of the market, or the bigger operators will eventually swallow up the smaller players.
However, for Maseko, acquisitions are not on the cards for Telkom.
“It will be difficult for us to acquire anyone in the fibre space because of the significant market power that we already have,” he explains.
“Where we are, in terms of the fibre roll-out, is exactly where we planned to be. So, normally you would get into a transaction either through consolidation or any form of coming together because you feel that perhaps you have lost time, or you don’t have the resources to help you catch up as quickly as possible.
“We have a quite strong balance sheet. So from a strategy point of view, we will continue to roll-out the fibre but we have reduced our cost of deployment substantively. So I am very happy with where the business is at and the opportunities that lie ahead.”
Regarding the mobile business, the Telkom CEO notes the plan is to continue to grow the unit so that the company can carry a lot of traffic.
Secondly, the operator plans build-to-scale platforms. “For example, we announced a partnership with EasyEquities, which will introduce a lot of our customer base to investments at the retail level.
“So not only are we democratising broadband, we are also democratising the ability to invest because our customers will no longer need to go to a broker to be able to trade shares. They can simply do that via their cellphones.
“We want to bring a lot of solutions to the customers’ palms in regards to what they can use broadband for.”
5G for enterprises
The other focus is 5G, Maseko says.
While competitors such as Vodacom and MTN have already lit up 5G networks in SA’s big metros, mostly targeting the consumer market, Telkom believes there is much to gain with the next-generation technology in the enterprise space.
Maseko says the telco last year ran a proof-of-concept on 5G “and that has been going on quite well”.
Telkom is looking to build on that proof-of-concept in its efforts to roll-out the next-generation technology, he notes.
“We are also looking to partner with different enterprises. We think the big beneficiary for 5G technology lies in the enterprise market – being able to take huge applications, put them in the cloud, and use 5G as the delivery mechanism on applications like SAP, Oracle and all of those platforms.
“So you will see us partnering with more enterprise clients, whether in mining, port operations or in motor assembly.”
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