Telkom sponsoring New Age breakfast

Telkom is sponsoring Thursday’s New Age Business Breakfast with Police Minister Nathi Mthethwa.

Telkom Mangaung mess waiting: analyst

However, neither the newspaper nor Telkom on Wednesday would say how much the sponsorship was costing the utility.

TNA spokesperson Gary Naidoo said he did not know how much Telkom was spending.

Telkom spokesperson Pynee Chetty said: “Details of Telkom’s product advertising agreements and sponsorship between Telkom and its media stakeholders are confidential.”

Earlier this month, City Press reported that some the biggest state-owned companies were paying millions of rands to bankroll the business breakfasts hosted by the Gupta family.

These included Transnet, Telkom and Eskom.

It was previously reported that Telkom sponsored 12 business breakfasts to the tune of R12m in the 2012/13 financial year, according to the newspaper.

Following the report Democratic Alliance leader Helen Zille pulled out of a TNA breakfast, saying she did not know it was sponsored using public funds.

This saw Zille and the newspaper come to loggerheads.

The newspaper responded by uploading a video of Zille thanking Telkom for sponsoring a previous TNA breakfast she attended.

Zille on Wednesday said TNA heavyweights tried to dissuade the DA from asking parliamentary questions on the paper’s funding.

The newspaper denied the claim.

Zille said she had written to President Jacob Zuma asking for a commission of inquiry to be appointed to probe the funding of the newspaper.


Telkom sponsoring New Age breakfast


Telkom Mangaung mess waiting: analyst

Chris Hart says that the ANC’s policy makers will ensure that Telkom will be “hitched to an ox wagon”

Communications Minister Dina Pule recently said that Telkom’s fate will be decided at the ANC’s electoral conference in Mangaung, but analyst Chris Hart feels that the ANC’s decisions will not help the company.

Pule told Business Day that ANC delegates at the Mangaung conference will weigh up the options the Department of Communications has proposed for reviving the company.

“The final policy decision that would be taken at the conference would shape Telkom’s strategy and the running of the sector in general,” Pule told Business Day.

However, Chris Hart, chief strategist at Investment Solutions, said that the ANC’s policy makers will ensure that Telkom will be “hitched to an ox wagon”.

“Telkom has fabulous potential, but you have archaic thinking from the governmental policy makers,” Hart said.

The analyst said that the strategic direction for Telkom from the Mangaung conference will have a traditional 1950’s idealistic overview instead of taking account the modern age of telecoms.

“Not even the British socialists would ever want to return to a single operator in that market – they know what it was like,” Hart said.

He added that Vodacom, MTN and Cell C are far better positioned than Telkom, which is hamstrung by government, to take advantage of the rapidly changing technology and telecoms market.

Telkom’s shares have lost nearly 48% of their value in 2012.

SourceTelkom Mangaung mess waiting: analyst

SA consumers steering away from state owned Internet service providers

Low download speeds and high costs are turning people away from fixed-line internet connections, Parliament’s communications portfolio committee heard on Thursday.

Over the past three years, there had been a “dramatic” increase in the number of households opting to connect through mobile devices, Independent Communications Authority of South Africa (Icasa) councillor William Stucke told MPs.

“The number of households who have fixed lines is… going down. This is not a healthy situation to be in.”

But the number of those where at least one member had access to the internet through a mobile phone was rising dramatically.

“A total of 32.9 percent of households now have access to the internet. It is growing because of mobile telephony… whose operators are not state-owned,” Stucke said.

His colleague, Icasa senior manager Pieter Grootes, said that in this regard the situation in South Africa was “out of whack”.

“The reality in South Africa is that fixed-line prices are out of whack with the existing situation, and it’s also out of line with trends in the rest of the world.

“This is a matter that, going forward, all stakeholders – government, Icasa and licensees – will have to come together to work out, and address the fact that fixed-line costs too much, for too poor a quality.”

Grootes said consumers who wanted to buy access to the internet would compare price and download speeds.

“If I want a fixed line, I’ve got to pay R331, and I’ll get a maximum of one Megabits per second (Mbps); however, I can go and buy – for R150 a month, from a mobile operator – a package that will give me download speeds of 21.6 Mbps.”

In practice, these download speeds were somewhat lower.

“What this means is that if I have a fixed line, what I’ll get, if I’m lucky, is 600 kilobits per second download speed, at three in the morning.

“If I used exactly the same mobile package, which is half the cost of the fixed line, I get a download speed of over 10 Mbps.”

Grootes said this was the main reason the number of fixed lines was dropping.

“Why should I as a consumer buy a fixed line if I can get a better, cheaper service from the mobile operators?”

But if South Africa wanted to enter the digital era, “the way to do so is to have high capacity, high quality, cheap, fixed-line connectivity”, he said.

Stucke said the main reasons fixed line was “losing relevance” were price and download speed.

“But fixed-line connectivity is capable, in principle, of providing a much higher quality connection; it’s just that not everyone is getting that at the moment,” he said.

He said fixed-line connectivity was ideal.

“When you have a fixed line, your connection between you and the concentration point is dedicated to you; it is yours and yours alone.

“Whereas, when you’re using spectrum for that last-mile connection, then every user of that particular piece of spectrum from that base station is sharing that connection.”

The problems in rolling out fixed-line connectivity included long delays in obtaining approval to lay high-speed lines, and high civil construction costs, Stucke said.

The committee is holding public hearings on the cost of communications in South Africa. – Sapa

SourceSA ‘paying too much’ for ADSL

Telkom’s profits taking a knock

Johannesburg – Telkom warned late on Wednesday that its profits could take a knock of up to 83%.

“Telkom SA SOC Limited
(Registration Number 1991/005476/06)
ISIN ZAE000044897
JSE Share Code TKG

Updated trading statement for the six months ended 30 September 2012

Further to the trading statement released on 20 September 2012 and in accordance with
section 3.4 (b) of the JSE Listings requirements, Telkom hereby advises shareholders
that headline earnings per share from continuing operations for the six months ended 30
September 2012 are expected to be between 78% and 83% lower than the comparative

Basic earnings per share from continuing operations for the six months ended 30
September 2012 are expected to be between 62% and 67% lower than that of the prior

Telkom’s interim results for the period ended 30 September 2012 will be released on or
about 19 November 2012.

This trading statement has neither been reviewed nor reported on by the company’s
external auditors.

14 November 2012

Sponsor: UBS South Africa (Pty) Ltd”

Date: 14/11/2012 07:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (‘JSE’). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

SourceSENS News

In the above trade update released after the markets closed on Wednesday, the telecommunications giant said it expected headline earnings per share from continuing operations for the six months ended September 30 2012 to be between 78% and 83% lower than the comparative period.

Basic earnings per share from continuing operations were expected to be between 62% and 67% lower.

The trade update was followed by an announcement that the parastatal appointed Jabulane Mabuza and Kholeka Mzondeki to its board on Wednesday.

Six board members, including CEO Nombulelo Moholi and board director Neo Phakama Dongwana, resigned earlier in November.

The election of a new chairperson may be contested by board members, especially those appointed by government, Business Day reported on Thursday.

Communications Minister Dina Pule voted off four board members at Telkom’s annual general meeting in October. The meeting was last chaired by Lazarus Zim, who announced his resignation as Telkom chairperson in September.

Moholi had rejected speculation that she intended resigning after Zim left.

Telkom’s share price had fallen by 10% since Moholi’s resignation.

The parastatal is expected to release its interim results on or about November 19.

SourceTelkom warns on profits

Telkom raking in on Internet connectivity costs in South Africa

You may be surprised about the breakdown of the cost of an ADSL Internet service in South Africa.

Internet Service Providers (ISPs) in South Africa are calling for a naked ADSL service and lower ADSL access rates. A breakdown of the cost of an ADSL service in the country clearly illustrates why this is so important.

An ADSL service in South Africa consists of 3 parts: Line rental, ADSL access, and an ISP account. The first two components (ADSL access and line rental) are paid to Telkom, and makes up the bulk of the cost of an ADSL service.

Telkom currently charges R148.37 per month for residential line rental (aka exchange connection), and R165.00 per month for 1Mbps ADSL access (the most affordable DSL service available).

The last portion needed to make an ADSL service work is an ISP account. These ADSL ISP accounts are essentially the only competitive area when it comes to ADSL, and costs range between free (for a 1GB account) and around R199 for an uncapped service.

However, the total cost of an ADSL account does not go to the ISP. Web Africa COO Rupert Bryant previously explained that the majority of the cost of providing an ADSL service goes towards Telkom’s wholesale IPConnect service.

Cybersmart CEO Laurie Fialkov confirmed Bryant’s figures, saying that around 60% of the total cost of providing an ADSL account is made up of the cost of IPC.

The following table provides an overview of the cost breakdown of a 1Mbps uncapped ADSL service.

Portion Details Price % of cost % paid to Telkom
Uncapped 1Mbps ADSL account (Cybersmart) R130.00 29.3%
–Intl Portion of Data International 30%
–Local  Portion of Data Local 10%
–Telkom IPC Portion of Data IPC 60% 17.6%
Telkom ADSL access R165.00 37.2% 37.2%
Telkom line rental R148.37 33.5% 33.5%
Total Cost to Consumer R443.37 100% 88.3%

Where to cut ADSL costs

It is clear that most of the cost of an ADSL service comes from ADSL access and line rentals, which means that the best way to reduce the cost of ADSL in South Africa is to target these two areas.

“I think the real issue is the cost of line rental and ADSL access,” said Fialkov. “These costs account for over 50% of the total ADSL cost in most offerings and more than 90% of the total ADSL cost for cap sizes less than 5GB,” said Fialkov.

The Cybersmart CEO further highlighted that another IPConnect price cut or the introduction of more affordable bitstream access service will only have a limited impact on the total cost of an ADSL service.

What is really needed is an ADSL price cut, and a naked ADSL service where subscribers are not forced to pay the line rental portion if they do not wish to use a Telkom phone.

However, Telkom has actually increased the cost of both ADSL access and line rental this year. This means that it is unlikely that consumers will see reductions in these two areas any time soon.

Telkom is also fighting against introducing a naked ADSL service, which means that the status quo is likely to be maintained for the immediate future.

Source – ADSL price breakdown: where to cut costs

The truth about ADSL costs in SA

Web Africa COO Rupert Bryant has provided details about the cost breakdown of ADSL. Unsurprisingly, most of your money ends up in Telkom’s pocket.

Bryant explained that it is challenging for local Internet Service Providers (ISPs) to make money on ADSL with the current cost structure.

“75% of ADSL revenue goes towards the wholesale network costs (and most of this is to Telkom). We’ve had to learn to be fairly lean and efficient. As a comparison, many international ISP’s typically spend only about 60% on network costs – a massive difference,” explained Bryant.

Like most other South African ISP owners, Bryant is calling for lower IP Connect (IPC) and ADSL access prices.

“‘The meat and potatoes of providing ADSL to the consumer, is IPC and the ADSL line portion. If we want real improvement, this is where we need to focus. The rest is rats and mice,” said Bryant.

“If we count the ridiculous ‘telephone line’ cost of R140 a subscriber has to pay, Telkom accounts for around 90% of the total ADSL cost.”

Bryant provided a breakdown of the cost of a 1Mbps ADSL service with a 10GB ISP account.


The following graph clearly shows how little of the total revenue goes to the ADSL ISP.

ADSL cost breakdown

ADSL cost breakdown

To solve the problem of high ADSL costs Bryant suggests better regulation or breaking Telkom into separate companies.

“The Telkom monopoly needs to be broken, the regulators and government need to get it together and either put some legislation down, or break up Telkom into separate wholesale and retail companies,” said Bryant.

Source – MyBroadband – The truth about ADSL costs in SA

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