Despite investing heavily in growing its mobile subscriber base, Telkom has been losing market share against Vodacom and MTN over the last five years.
In the nineties and early 2000s, Telkom was the dominant telecommunications player in South Africa.
It enjoyed a government-protected monopoly on fixed-line services, and its 50% stake in Vodacom made it a big mobile player.
Things started to change after Telkom lost its fixed-line monopoly and decided to sell its 50% shareholding in Vodacom in 2008.
Telkom launched its own mobile operator, 8ta, to take on Vodacom, MTN, and Cell C, but it was not a cheap exercise.
Over the past thirteen years, Telkom has spent R25 billion on its mobile network but is still far from competing effectively against Vodacom and MTN.
Telkom has also been losing fixed broadband market share. Its ADSL service used to dominate this area, but the arrival of fibre, fixed-LTE, and 5G changed the landscape.
Telkom is now trailing Vumatel in the fibre market and is facing stiff competition from Vodacom, MTN, Rain, and Cell C in the fixed-wireless arena.
Add to that a big decline in fixed-line voice revenue and an ageing copper network, and it is understandable that Telkom is not a favourite among investors.
Market share battle
ICASA’s 2022 State of the ICT Sector Report revealed that telecommunication revenue exceeded R200 billion in 2021.
Mobile services revenue contributed R114 billion, fixed Internet and data revenue R23 billion, and fixed-line revenue R7 billion.
What is telling for Telkom is that fixed-line revenue, its main revenue stream for years, declined from R15.8 billion to R6.5 billion over the last six years.
Mobile revenue, in comparison, increased from R79 billion to R114 billion over the same period.
It is, therefore, understandable that Telkom decided to invest heavily in becoming a prominent mobile player.
Despite significantly growing its mobile revenue and subscriber base, it is still losing market share against Vodacom and MTN in South Africa.
Over the last six years, Telkom was only able to marginally grow revenue — from R41 billion in the 2017 financial year to R43 billion in the 2022 financial year.
Over the same period, Vodacom grew its South African revenue from R65 billion to R80 billion. MTN increased revenue from R42 billion to R49 billion.
The result is that Telkom is getting a shrinking share of the R200 billion telecommunications market in South Africa.
The chart below shows Telkom’s relative market share against Vodacom and MTN over the last five years.
This article first appeared on Daily Investor and is republished with permission.
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