Telkom will have its work cut out for it when it launches its mobile operation later in the year, as the company will challenge incumbents in a saturated market, note analysts.
The fixed-line operator is launching what will be SA's fourth mobile operation and expects to spend about R6 billion over five years to develop infrastructure. The move is necessary, says Telkom, because the company is seeing slowing revenue from fixed voice lines.
“The majority of global fixed-line incumbents have discovered that a successful operation requires an integrated mobile business. We believe that there is a market opportunity in SA as mobile voice and especially mobile data are still experiencing growth,” says Telkom.
Its future growth hinges on its data offerings, African expansion, and SA – where mobile is vital in offsetting the dwindling number of fixed-voice minutes.
Irnest Kaplan, MD of Kaplan Equity Analysts, says Telkom's target market is already saturated. “Everyone has a cellphone, it's very saturated, at least among the people who can afford it.”
Kaplan queries: “On what basis will they be able to convince potential customers to switch?”
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