Telkom share price nosedives, now with less than 1 million landline customers

Telkom’s share price declined almost 9 percent on Tuesday after the company released its latest annual results. Growth has stalled significantly, while its landline customer decline has sped up in the last financial year. Telkom plans to decommission its old copper lines, and now has only 997,000 subscribers on the old technology as most have moved to mobile services and fibre-to-the-home internet connections.

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Fibre was a strong growth market for Telkom, although it could not offset the missed targets on the mobile subscription side. After a period of rapid growth, it has now stalled with fewer than expected subscribers added over the last 12 months.

A bigger concern to investors was the fact that no growth has come from broadband over the last 6 months.

Mobile data revenue has also flattened over the last 12 months after massive growth since 2012. Telkom blamed South Africa’s “intensely competitive landscape” and warned investors to expect the mobile division’s growth to level off. “Telkom Mobile has grown ahead of the market and secured a third market position,” the company stated. “Going forward, we expect Telkom Mobile to grow in line with its industry peers.”

Telkom reported 584 200 fixed broadband subscribers – including copper DSL and fibre-to-the-home lines – at end-March which was down 3.6% compared the year-ago figure. Telkom “all-access” subscribers – mainly DSL customers – fell by 10.8% to less than 300 000. Fibre homes passed and connected, by comparison, jumped by 38.4% to 389 100.

Despite the decline in fixed lines in service, fixed-line broadband Arpu (average revenue per user is a closely watched industry metric) increased by 10.5% to R273.92. Fixed-line voice Arpu, however, plunged by 21.3% to R275.63.

In terms of data volumes, Telkom reported a 16.6% increase in fixed broadband usage to 1.67 petabytes; fixed voice traffic fell 9% to 6.18 million minutes.