The recent liberalisation in the market, coupled with its disinvestment from Vodacom, gives Telkom an opportunity to enter the mobile market.
According to a statement by the operator, by developing an integrated fixed-mobile offering Telkom will seek to leverage its customer base, marketing, logistics and distribution channels to increase its share of voice revenue.
In addition, it states, Internet access demands are increasingly requiring mobility. An integrated bundled offering would offer superior speeds and quality through the fixed-line, including the advantages of mobility when required by the customer.
"Mobility provides cost efficiencies and the opportunity to consolidate traffic onto Telkom's network," says the statement. "Currently, mobile customers are experiencing the effects of a highly congested network and poor quality of service. Telkom intends to use the strengths of its fixed-line network to differentiate its mobile service on quality with a fully converged array of products and services.
"Our Next Generation Network and access to the latest technologies will provide further value to our customers."
Telkom has rolled out 141 W-CDMA sites in major metropolitan areas throughout South Africa, with its initial focus being on theft, breakages and incident-prone areas, customers waiting for service and greenfield areas where Telkom has no copper infrastructure.
The W-CDMA technology allows Telkom to deploy fixed-line lookalike services with regional fixed numbering plans instead of deploying copper, especially in high copper theft areas or areas where copper deployment is not feasible or too slow to roll out.
This roll-out will be extended to rural areas and to replace expensive to maintain legacy equipment.
"Our move into offering a fully fledged mobile service is dependent on the finalisation of market research and the outcome of pilot and customer trials planned for the end of 2009," says the statement.
Telkom CEO Reuben September adds that the ICT market is never static, rather being characterised by fluidity, change and constant innovation.
"The transformation of Telkom is absolutely necessary to allow us to be agile and responsive to our customer needs and to the changing environment," he says. "We are in the process of reorganising our organisation into a single corporate centre and three operating business units.
"The new structure introduces simplicity into the organisation, aligns with our vision and strategy, instills an imperative profit and loss accountability and provides opportunities to manage cost, to manage our resources more efficiently and to execute our strategy with greater focus. Telkom, unhindered by the restrictive Vodafone shareholders` agreement, is ready to aggressively compete in the communications market.
"Our operation in South Africa remains our core business and cash flow generator. Telkom`s defend and grow strategies are on track. We have achieved good growth in our bundled calling plan products, Telkom Closer and Supreme Call, and strong growth in our broadband products."
Data revenue continues to achieve double digit growth, delivering a 12,1% revenue growth to R9.3-billion for the year ended 31 March 31.
"Our continued drive to enhance our Next Generation Network is delivering benefits and provides us with a significant competitive advantage in our drive to provide customers with quality, cost effective products and services covering the full ambit of converged ICT services," says September.
"Given the continued decrease in our voice revenues due to mobile substitution and increased competition it is vital for Telkom to explore all avenues that will provide us with growth and migrate traffic back on to our network.
"We now have the opportunity to enter the mobile market in South Africa. We are in the process of conducting comprehensive mobile market research to establish exactly how Telkom can maximise the opportunity at minimal operational and build cost. We believe that Telkom is able to take advantage of our Next Generation Network and newer technologies will give us an advantage over the current mobile operators in terms of our ability to carry increased traffic, provide superior quality and to compete."