Big changes for Telkom

South Africa’s telecommunications industry has undergone many changes in the last few years, which is reflected in the results of some of South Africa’s largest telecommunications companies, like Telkom.

This is according to Stats SA, which measured industry changes from 2019 to 2022. Stats SA explained several notable sectoral shifts during this period, reflecting broader economic changes.

In 2022, telecommunications services generated R254 billion in income, and mobile voice was the biggest earner, accounting for just over a third of the total.

Of the services that help keep the telecommunications sector afloat, mobile lines account for almost two-thirds of income.

“On a more granular level, mobile voice and mobile data were the largest contributors to mobile lines, with SMS services taking up a smaller portion,” Stats SA explained.

In Telkom’s latest trading update, it similarly revealed that mobile revenue increased by 5.3% to R5.7 billion for Q1 of 2024/2025. 

Stats SA further found that ADSL is on its way out as fibre broadband takes over.

“The most striking change in the 2019 to 2022 period concerns ADSL and fibre-optic broadband. ADSL, which uses copper wire infrastructure, declined sharply in this period,” the organisation said. 

“In 2019, ADSL was the largest generator of income in the internet access services category, falling to third place in 2022.”

Less than 4% of fixed broadband users in South Africa are still using digital subscriber line (DSL) connections, a dramatic decline from the technology’s overwhelming dominance less than a decade ago, MyBroadband explained.

In December 2023, Telkom reported a decrease in DSL services to approximately 82,000, the last-confirmed connections. 

These connections make up just 3.9% of the total across FTTH and DSL. When the plethora of smaller operators in the FTTH market is included, its market share will likely shrink much lower.

“Fibre-optic broadband expanded to fill the gap, increasing by more than three-fold,” Stats SA said.

“The rise in fibre-optic could be due to a number of reasons, including increased demand during the pandemic.”

Telkom has reported similar changes, saying there has been tremendous growth in fibre-to-the-home (FTTH) connections on its Openserve network over the past year.

As of 31 December 2023, the fibre network operator (FNO) had 567,350 homes connected to its fibre network, an increase of 97,794 from the 469,556 it had a year earlier.

According to Telkom’s latest trading update, this trend has continued in 2024.

“Openserve’s connect-led strategy continued to deliver positive results with an increase of 19.5% in the number of homes connected to 615,430, resulting in a connectivity rate of 49.0%, which continues to be market-leading,” the company said.

Stats SA said other internet access services increased, too, leading to an increase in the category’s total income from R17.3 billion in 2019 to R18.8 billion in 2022.

After ADSL, SMS services recorded the largest decline, retreating 24% per annum, Stats SA explained.

“In 2019, SMS services generated R3.4 billion, contracting to R1.5 billion in 2022.” Other messaging services have been replacing SMS services for years. 

According to Statista, WhatsApp is the most popular social media in South Africa. As of the third quarter of 2023, 94% of internet users in the country used the messaging app. 

“Voice services (fixed and mobile), line rental, interconnection services and satellite-provide services also recorded decreases in this period,” Stats SA said.

Telkom’s trading update similarly revealed that overall revenue declined by 2.4% to R3.06 billion year over year, primarily due to a 28.4% (R188 million) decline in voice and legacy revenue.

“Stronger results were recorded for items related to the transmission and consumption of data, including fixed line data, fibre-optic broadband, mobile data, content subscription and data transmission services,” Stats SA added.