Healthy competitions
The decision to spin off the wholesale business into a stand-alone unit comes three years after the group agreed with the Competition Commission - which found it guilty of anticompetitive behaviour - to implement a functional separation of the wholesale and retail businesses. Such a decision was meant to enable management to be transparent about its pricing to its clients, especially internet service providers.
BMI-TechKnowledge MD Denis Smit said Telkom's decision "is a very welcome move and, in general, long overdue, and the wider industry will support this move". This could be the key that "unlocks the National Broadband Network as mentioned in the SA Connect Broadband Policy", he said.
The move will be in line with international fixed-line businesses such as the UK's BT, which created a separate wholesale business called Openreach about 10 years ago, to house the infrastructure division of BT Group. This came after an agreement between BT and UK regulator Ofcom to ensure rivals got equal access to the operator's network.
Telkom wholesale and networks division MD Alphonzo Samuels said in an interview that a separate entity would further strengthen Telkom's objective of being an open-access network provider. "We want to make a clear distinction on what retail business does and what wholesale does," he said.
The separation could herald a new era for the group and result in a more competitive market and the prospect of lower prices for consumers. Telkom has already begun reducing prices associated with wholesale network infrastructure access.
Telkom is spending billions of rand in rolling out fibre to homes in certain areas - mainly high-end suburbs - across the country as it gears to connect 70,000 homes by the end of the year. The company aims to have provided fibre connections to one million homes by 2018. Telkom has a first-mover advantage in some of the key suburbs where it already has network infrastructure.
"First-mover advantage is key for us and we can back it up with the latest and more reliable technologies," said Samuels. For example, in areas where customers are relying on copper, Telkom will, among other things, replace the last-mile copper with fibre. It will continue to add more suburbs to receive fibre to the homes, including in smaller cities.
Ultimately, Samuels said, Telkom's goal is to make communication infrastructure and services accessible to more people at affordable prices. "We want to democratise broadband. We want to make an impact and ensure SA's global ranking in broadband improves." he said. Telkom is working closely with the government as a lead agency for the roll-out of the national broadband network. This is a project driven by the government that aims to ensure that every citizen has access to broadband infrastructure and services.
"We are working on a number of plans. We have done modelling on eight districts," said Samuels. However, he would not disclose further details.
Source: Business Day
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