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Unlucky 13 as Telkom increases line rentals again

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Telkom announced its new tariffs today, including the unwelcome news that it would raise the cost of line rentals for a straight 13th year in a row – pushing the real price increase to above the inflation rate, despite claiming the opposite, writes ARTHUR GOLDSTUCK.

Telkom announced today that it has set its increase on basic voice and data connectivity services at an overall 1.3% – “far below the Consumer Price Index, which is currently at 5.6%””.

However, lurking in the announcement was the news that it would increase the cost of line rentals for consumers by 5.8% to R157 per month and for businesses by 6.2% to R216.00 (Incl VAT) per month.

This means that it has increased its most heavily used services at a rate higher than inflation, and the real impact may well be that the cost for the average customer will rise by above the inflation rate.

The increase also marks the 13th year in a row that Telkom has conistently increased the cost of line rentals. This is despite the fact that, in its annual reuslts announced last week, Telkom revealed that its fixed line customer base had fallen once again – for the 13th year in a row.

Telkom has always argued that it costs more to maintain the fixed line infrastructure than it generates in revenues, calling this the “”access line deficit””. However, it also recently announced that it had “”impaired”” – written off – the entire value of its legacy infrastructure, meaning that the cost of the infrastructure itself disappears from the books. However, no account was taken of this in revising pricing.

In an recent analyst briefing, Telkom chief operating officer Dr Brian Armstrong pointed out that the primary driver of fixed line decline – in South Africa as well as the rest of the world – was “”fixed mobile substitution””. As a result, price reduction would not see see subscriptions stabilise, only revenues decline.

“”What we need to do is manage revenue migration to mobile,”” he said. “”While we think there is a small amount of price elasticity (the extent to which a lower price would increase subscriptions), it’s too slow to justify a price-based strategy to recover subscription volumes.””

He acknowledged, however, that price should ultimately be driven by market forces.

Manelisa Mavuso, Telkom’s Managing Director: Consumer Services and Retail, argued that low or no increases across a basket of services showed Telkom had customers’ interests at heart:

“”Telkom is committed to serving customers’ best interests and to making telecommunications accessible to all South Africans. We have therefore endeavoured to contain the adjustments to a minimum and kept them significantly lower than inflation, which is currently at 5.6%,”” he said.

He highlighted the fact that DSL and Telkom Internet monthly subscription charges remain unchanged, even though current upgrades, as part of the Company’s Network Transformation Programme, will result in speed increases on the Fast and Faster DSL options.

The Telkom announcement included the following specific tariffs:

* A decrease in the tariffs for outgoing fixed to mobile calls of 3.1% to R1.30 (Incl VAT) per minute during peak time and by 2.7% to R1.05 (Incl VAT) per minute during off-peak time.

* A significant decrease for current long distance calls, as on-net local and long distance call tariffs for postpaid and WorldCall will be combined into to a single tariff of R0.46 (Incl VAT) per minute during standard time and R0.23 (Incl VAT) per minute during Callmore time. The minimum charge will be R0.63 (Incl VAT).

* PrepaidFone on-net local and long distance call tariffs will be combined into one and charged at R0.70 (Incl VAT) per minute during standard time and R0.33 (Incl VAT) per minute during Callmore time. The minimum charge will be R0.96 (Incl VAT) and the surcharge for PrepaidFone and Top-up increases from R0.66 to R0.70 per call.

* Installation charges will increase by 6% and this includes postpaid, PrepaidFone ISDN and DSL services. Line rental for PrepaidFone (weekly/monthly and Top-up) also increases by 6%.

% International calls are adjusted by 0% overall, however, tariffs to some destinations will increase, some will decrease and others will remain unchanged.

* Postpaid analogue residential line rentals will increase by 5.8% to R157.00 (Incl VAT) per month and business line rentals will increase by 6.2% to R216.00 (Incl VAT) per month.

* The monthly subscription for the Telkom Weekender Plan (previously Closer 1) increases to R176.00, Telkom Evening and Weekend Plan (previously Closer 2) to R194.00 and Telkom Unlimited Anytime Plan (previously Closer 3) to R350.00.

* All public payphone call tariffs remain unchanged.

Here are the full rates:

Current

W.e.f. August 2013

Standard time

Callmore time

Standard time

Callmore time

Minimum charge

Per minute rate *

Talktime for minimum charge

seconds

seconds

seconds

seconds

* Actual calls are charged per second with a minimum charge per call

Postpaid call charges (>50km) Long distance:

Current

W.e.f. August 2013

Standard time

Callmore time

Standard time

Callmore time

Minimum charge

Per minute rate *

Talktime for minimum charge

seconds

seconds

seconds

seconds

* Actual calls are charged per second with a minimum charge per call

PrepaidFone call charges (0-50km) Local:

Current

W.e.f. August 2013

Standard time

Callmore time

Standard time

Callmore time

Minimum charge

Per minute rate *

Talktime for minimum charge

seconds

seconds

seconds

seconds

* Actual calls are charged per second with a minimum charge per call

* The surcharge for PrepaidFone Top-up increases

from 66c to 70c per call.

PrepaidFone call charges (>50km) Long distance:

Current

Standard time

Callmore time

Standard time

Callmore time

Minimum charge

Per minute rate *

Talktime for minimum charge

seconds

seconds

seconds

seconds

* Actual calls are charged per second with a minimum charge per call

* The surcharge for PrepaidFone Top-up increases

from 66c to 70c per call.

Calls to some popular International fixed line destinations

Peak

Global Off-peak time

Peak

Global Off-peak time

Minimum charge:

R0.57

R0.57

R0.63

R0.63

Price per minute:

Peak

Global Off-peak time

Peak

Global Off-peak time

UK

R 0.60

R 0.60

R 0.60

R 0.60

USA

R 0.60

R 0.60

R 0.60

R 0.60

Canada

R 0.70

R 0.70

R 0.60

R 0.60

France

R 0.75

R 0.75

R0.75

R0.75

Australia

R 0.75

R 0.75

R0.75

R0.75

Portugal

R 0.97

R 0.72

R0.81

R0.81

Germany

R 1.12

R 0.81

R1.13

R1.13

Botswana

R 1.43

R 1.17

R1.43

R1.43

India

R 1.16

R 0.93

R1.13

R1.13

Namibia

R 1.17

R 1.01

R1.13

R1.13

Zimbabwe

R1.58

R1.46

R1.54

R1.54

Other charges:

Current

W.e.f. August 2013

Residential

Business

Residential

Business

Monthly rental (analogue line)

R148.37

R157.00

ISDN 2a

DSL and Telkom Internet bundles (all unchanged):

Telkom Closer:

PrepaidFone:

Outgoing calls to mobile/cellular services from postpaid and PrepaidFone: To Vodacom, MTN, Cell C & 8.ta

Public payphone call charges: Coin and cardphones:

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“”Telkom has always argued that it costs more to maintain the fixed line infrastructure than it generates in revenues, calling this the “”access line deficit””. However, it also recently announced that it had “”impaired”” – written off – the entire value of its legacy infrastructure, meaning that the cost of the infrastructure itself disappears from the books. However, no account was taken of this in revising pricing.””

As you even state in the paragraph, MAINTENANCE costs exceed revenue. Thus is doesn’t matter what the book value of the infrastructure is in this case.

Regards Arthur””,””body-href””:””””}]”

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