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Openserve Separates From Telkom

Openserve Separates From Telkom

Telkom announced that it will legally and structurally separate its wholesale and networks division, Openserve, from the rest of the business on the 1st of September 2022.

Openserve operates an over 160,000km national fibre network for Telkom, and its old copper telephone lines. Telkom first launched Openserve on 13 October 2015 as the functional separation of its wholesale and retail operations.

This was part of a settlement agreement between Telkom and the Competition Commission announced on the 17th of June 2013. Telkom would pay a R200-million fine for anti-competitive behaviour between 1999 and 2004, and 2005–2009, and functionally separate its wholesale and retail divisions.

The Competition Commission said that telecoms giant made admissions to excessive pricing and engaging in “margin squeezing” against competitors. Telkom has now announced it would extend this functional separation to a structural and legal separation of the two divisions.

“We have been on a journey to transform and unlock value in the Group by separating the operating businesses to become standalone entities, which started with BCX and subsequently Gyro, which now operate as separate legal entities wholly owned by Telkom SOC,” said Telkom CEO Serame Taukobong.

“Openserve follows suit as a wholly owned subsidiary of the Telkom Group, which will promote and drive autonomous ability and market visibility.”

Althon Beukes, the Openserve CEO, said the separation positions Openserve to respond to the ever-changing regulatory and competitive environment. It also enables them to focus on growth ambitions.

Beukes said that the significant strides Openserve has made since 2015 are evident in the announcement that Openserve will serve as the landing station partner for Google’s Equiano submarine cable system.

The Equiano cable will run from western Europe, along the west coast of Africa, to Openserve’s facilities in Melkbosstrand in the Western Cape.

Telkom announced in a trading update on Tuesday that Openserve’s last-mile fibre network passes over 890,000 homes in South Africa, with a connectivity rate of 46.6%. With over 414,847 customers connected to its fibre network, Openserve is vying for first place with South Africa’s upstart fibre leader Vumatel.

Vumatel said in July that it had about 450,000 customers connected to its fibre network. At the same time, MTN is showing an interest in buying Telkom.

MTN and Telkom announced on 15 July that MTN is in early discussions to buy Telkom’s entire issued share capital in exchange for shares or a combination of cash and shares. Industry experts have warned that such a deal would have to be carefully structured, as any acquisition that includes Telkom’s

However, they also believe that MTN isn’t after Telkom’s spectrum this time, but its extensive fibre assets. This would be to compete with a potential merger of Vodacom’s fibre network with Vumatel, which is currently before South Africa’s regulators.


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