There was a time when the very mention of Telkom could sour a room. As the lumbering fixed-line monopoly of the 1990s and early 2000s — infamous for eye-watering tariffs and interminable service delays — the company became a symbol of consumer frustration. It was the operator South Africans loved to hate.
Two decades later, it is staging an unlikely comeback. Under the stewardship of CEO Serame Taukobong, Telkom’s growth story is starting to look not just credible but durable. And its latest financial results underline how effectively it is positioned next to bigger rivals Vodacom and MTN.
Telkom’s interim results for the six months to September 30, released last week, paint a picture of a business that has rediscovered its strategic footing. Group revenue climbed 3.4% to R22.1bn, while headline earnings per share rose 16.4%.
That expansion in profit owes something to structural tailwinds — including a reduction in finance costs — but it also reflects genuine operating momentum. Its mobile business, the engine of Telkom’s revival, grew service revenue by 7.9%, while mobile data users surged by 26.7% to 18.5-million.
What stands out is not only the speed of the mobile growth but its quality. Telkom has spent several years building a mobile proposition that speaks directly to the realities of South African consumers. It hasn’t tried to out-Vodacom Vodacom or out-MTN MTN. It has played to its strengths: a leaner radio network, ample fibre backhaul through Openserve, smart use of analytics and personalisation technology, and a data-first value proposition that meets a market where it is.
This strategic clarity is paying off.
Prepaid — the real battleground of South African telecoms — is where the shift is most visible. Once dismissed as an also-ran in mobile, Telkom has added millions of prepaid customers over the past five years, with prepaid data leading the charge.
About half of its prepaid sales now run through Mo’Nice, a dynamic, personalised offering built using machine-learning models that tune data bundles and pricing to individual usage behaviour.
Telkom is playing a measured, disciplined, data-centric game — one that resonates in a country where most consumers watch every cent they spend
Its average revenue per user (Arpu) — a key measure of pricing power — has held steady, with blended Arpu at about R75 and prepaid Arpu a respectable R58. For a challenger network that positions itself as a value brand, maintaining Arpu while growing share is the balancing act you want.
Underpinning this is a cost structure that is quietly advantageous. Because Telkom largely skipped the 2G/3G legacy that its rivals still support, it operates a predominantly 4G network, offloading 2G voice to roaming partners. Layer on Openserve’s dense national fibre footprint — an asset no other mobile operator owns — and Telkom’s cost to serve is structurally lower.
Contrast this with the performance of MTN and Vodacom, and Telkom’s outperformance becomes clearer. Vodacom South Africa grew service revenue by just 2.2% over the comparable period and lost more than 7% of its prepaid subscriber base. MTN South Africa did only marginally better, with service revenue up 2.3%, data revenue up 4.3%, and price competition eroding voice revenue. MTN has acknowledged the problem: it has lost market share “mostly to Telkom” and is now redeploying resources to stem that bleed.
International portfolios continue to carry the growth narrative for both Vodacom and MTN, but at home they are contending with a consumer under severe economic strain and a highly competitive market. Telkom isn’t free of those pressures, but it is navigating them deftly.
Much of this comes down to Taukobong’s quiet but confident leadership. Since taking the reins, he has built on the structural overhaul of Telkom engineered by his predecessor, Sipho Maseko. He has focused relentlessly on simplifying the business, cutting debt and tightening costs. Today Telkom is playing a measured, disciplined, data-centric game — one that resonates in a country where most consumers watch every cent they spend.
That said, this is not a fairytale narrative of effortless resurgence. Revenue growth of 3.4% is hardly electrifying. And the sustainability of double-digit earnings growth remains unproven.
Moreover, the prepaid data segment is becoming more contested, not less. Vodacom and MTN are not going to surrender market share without a fight. Mobile virtual network operators such as Capitec Connect are driving down retail pricing. And while the integration of Openserve creates synergies, the enterprise IT arm — BCX — is still a work in progress. Fibre growth, too, has slowed across the sector.
Still, one can’t ignore the broader story: Telkom is now a competitive force in mobile and fibre. And it has done so not through luck or regulatory windfalls, but through strategic discipline, better cost management and tighter execution. The company that once epitomised monopoly stagnation has become a symbol — however unlikely — of reinvention and value-driven competition.
The question is whether it can build on this base and sustain the momentum. For now at least, the company once defined by consumer discontent is doing rather well by — shock, horror — listening to its customers.
McLeod is editor of TechCentral
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