South Africa’s monopoly fixed-line operator, Telkom, startled the market this week with news that its mobile division had almost doubled its subscriber base, by 85.9%, to 9.7-million. With the fixed line subscriber base declining every year for the past 18 years, Telkom had pinned its hopes on significant uptake of the mobile service in a highly competitive environment.
For the year ended 31 March 2019, overall growth for the organisation was muted, with a 5.3% increase in group operating revenue to R41.8-billion. Mobile services revenue, however, increase by 58.3%, underpinned by the group’s broadband-led proposition, according to a statement from Telkom.
“This is on the back of increased competition and the fact that technology changes continue to place the fixed business under pressure,” it said. “The results offer proof that the group’s strategy of investing in new technologies continues to bear fruit.”
EBITDA increased by 8.5% to R11.3 billion, which can be attributed to our ongoing sustainable cost management. The group EBITDA growth is faster than the revenue growth of 5.3%. The EBITDA margin expanded by 0.8% to 27.1%.
“In line with global trends, our fixed business remains under pressure,” said Sipho Maseko, Telkom Group CEO. “With that in mind, investing in technologies to drive future revenue streams necessitates the evolution of the group’s skill base and acquiring various capabilities. Our human capital investment focuses on creating efficiency and effectiveness in the context of growing the business, achieving operational excellence, retaining key skills and ensuring our future competitiveness.”
Despite adding 4.5 million subscribers, Telkom’s blended average revenue per user was stable at R100. Mobile revenue contribution increasing from 3.2% to 25.7%, while information technology revenue grew from 0.9% to 16.2%.
Telkom said it continues to invest in the fibre ecosystem, which is sustaining fixed data revenue.
Regarding other business segments, it said in its statement: “Gyro’s revenue increased by 24.%, underpinned by the group’s strategy to separate the property portfolio to improve management focus and unlock value for the group. Further to this, the dedication and focus on the mast and tower as well as the property portfolio has enabled the business to service clients more effectively and will enhance competitiveness as the largest independent tower company in South Africa. Telkom will continue to explore and deploy the latest technology to reduce development cost and maximise development yield while offering competitive rental levels to clients.”
Performance of its BCX subsidiary remains “dampened”. It said BCX’s revenue “significantly improved from a R1 billion revenue decline in the prior year to a revenue decline of R683 million”. This is attributed to several initiatives to stabilise the business, including a change in operating model and the enhanced strategy to focus on customer retention.
It said the pricing transformation journey that Openserve embarked on two years ago was starting to show positive signs and revenue was resilient despite customers migrating to next-generation technologies at lower price points. Translated, this indicates that the decline of ADSL has slowed down due to improved pricing, despite ongoing migration to fibre.
The numbers, however, tell a different story. Telkom reported that its ADSL, VDSL, and fibre subscribers combined declined by 13.6%, from 981,176 in March 2018 to 847,650 in March 2019. Assuming that fibre installations have been increasing, this suggests a continued collapse of the ADSL subscriber base.
“Despite price reductions over the past two years, ongoing voice revenue pressure and a change in the revenue mix, Openserve contained the revenue decline at 3.3% and EBITDA grew by 3.4 points to 37.1%,” Telkom said. “This was enabled by, among others, our strategy to modernise the network to improve cost to connect and cost to serve.”
During the period, Telkom made a capital investment of R7.7 billion, with a capital expenditure to revenue ratio of 18.4%.
“The ongoing investment enabled Telkom to grow new revenue in evolving technology, offsetting the traditional revenue shrinkage. Telkom will continue to proactively invest in technologies and the network so that the group remains at the forefront of change.”
Did an earthquake take out SA Internet?
Seabed avalanches caused by an earthquake could have cut several undersea cables, leading to one of South Africa’s biggest Internet outages yet, writes ARTHUR GOLDSTUCK.
There is still no official explanation for freak breaks 11 days ago in two separate undersea cables that provide international access to South Africa’s Internet users. However, as reported in the Sunday Times yesterday, the most common causes of such breaks are damage by ship anchors and earthquakes at sea.
However, the freak occurrence of two separate cables being cut simultaneously far out at sea, as happened on the morning of 16 January, can only be explained by sea-bed activity. One of the cables was cut in two places, and it is widely believed that a third major cable was also cut.
The cable damage mostly occurred in or near an area called the Congo Canyon, which starts inland and extends 220km into the sea. It is known for having the world’s strongest “turbidity currents”, underwater sediment avalanches over hundreds of kilometers, which are known to destroy undersea cables.
The most likely culprit is a 5.6 magnitude earthquake that struck the Atlantic Ocean near Ascension Island shortly before the cables were cut on the morning of 16 January. The earthquake occurred just before 8am South African time, and local ISPs reported losing international access from just before 10am. The epicentre of the earthquake was more than a thousand kilometres off the coast of Africa, but disturbances caused by seismic activity at sea become more powerful as they approach the coast. Combined with turbidity currents, this could well have taken out all cables in the area.
The West Africa Cable System (WACS) was cut in two places, and the South Atlantic 3 (SAT3) cable in one location. Industry insiders believe that the Africa Coast to Europe (ACE) cable was also cut, but it has not been publicly confirmed.
South Africa is connected to the global Internet via seven such cables, with a total capacity of 42.3 terabits per second (tbps). These cables, in turn, connect to additional cables connecting the West and East coasts of Africa, with a single cable running from Angola to Brazil providing another 40 tbps.
However, it emerged in the past week that smaller ISPs in South Africa had bought capacity on only one or two cables. In a freak occurrence, two of the most commonly used cables, the WACS and SAT 3 cables, were cut simultaneously, plunging millions of Internet users into data darkness.
Customers of the major mobile network operators – Vodacom and MTN – were largely unaffected, as these tend to have both part-ownership and access to most of the cables running up both the East and West coasts of Africa.
Visit the next page to read about how ISPs have battled to reroute access, how massive resources are needed to deal with these kinds of outages, and when the ship will reach the breakage points.
Lenovo express-delivers new range from CES to SA
Lenovo has unveiled its new range of ThinkBook laptops, barely two weeks after they were showcased at the Consumer Electronics Show in Las Vegas.
The company’s newest sub-brand, ThinkBook, is intended to meet the demand for more aesthetically pleasing, yet agile and powerful devices.
The new range is aimed at small and medium enterprises. According to the Small Enterprise Development Agency (SEDA), there are more than 2-million SMEs in South Africa – although there are only 667,433 in the formal sector. This tallies with estimates in recent editions of SME Survey, produced by World Wide Worx, which suggest 650,000 active, formal businesses in South Africa. These SMEs employ about 14% of the South African workforce.
Lenovo argues that access to affordable, yet efficient, technology is a crucial factor in aiding business success and contributing towards the success of the nation. The company has found, in its own research, that younger people prefer working, creating and communicating online “with stylish devices that make a statement”. This means they require streamlined laptops which can be used to collaborate from any remote location, to enhance productivity.
Lenovo said in a statement on Thursday night: “Backed by customer research, ThinkBook is specially designed for SMEs, who typically purchase consumer laptops for perceived design and price advantages but can no longer rationalise their lack of extended services and warranties – core needs of any business. ThinkBook allows growing firms to keep a competitive edge in attracting today’s young tech-savvy execs with trendy yet cost-effective devices.
Thibault Dousson, general manager of Lenovo for Europe, Middle East and Africa, said at the launch event: “With the capacity, SMEs have to grow and upskill the country’s workforce, they are perfectly positioned to bridge the gap between the public sector and large enterprise. Bearing in mind the demands of the digital economy, this sector needs skills and resources in order to compete, and that is where devices such as the ThinkBook come in.”
In South Africa, ThinkBook laptops are now available in 13-, 14- and 15-inch variants. The flagship ThinkBook 14 and ThinkBook 15 devices are powered by Windows 10 Pro and up to 10th Gen Intel Core processing, which Lenovo says combines high performance with intuitive, time-saving features. Options include Intel Optane memory, WiFi 6, and discrete graphics.
The ThinkBook 15 comes at just 18.9mm thin, while the ThinkBook 14 is a mere 17.9mm, both with FHD displays and two Dolby Audio speakers, dual-array, Skype certified microphones and a USB 3.1 (Gen2, Type-C) port.
Lenovo has also introduced the ThinkBook S series, including an elegant 13.3-inch ThinkBook 13s. The sleek and light device is constructed of a metallic finish on an all-aluminium chassis, alongside a narrow bezel display. As with the ThinkBook 14 and 15, the ThinkBook 13s also features advanced Intel processing and an FHD display, Dolby Vision and Harman speakers with Dolby Audio.
Visit the next page to read about the design and features of the new ThinkBook range.