Openserve Splits from Telkom South Africa

Openserve Splits from Telkom South Africa

OpenServe, the wholesale network infrastructure division of Telkom Group, a provider of mobile networks in South Africa, has announced it will henceforth operate as a separate subsidiary.

Following the conclusion of a balance sheet and asset allocation exercise, Telkom disclosed this in its 2023 Q1 financial results. The division will take effect on September 1, 2022.

Telkom Group CEO Serame Taukobong discussed the division in his remarks, noting that the Group has been trying to change and unlock value by dissolving its operating businesses into independent organizations.

This division began with the Group’s faltering IT enterprise services business, BCX, and then moved on to Gyro, its real estate, and property division. Both companies currently function as independent, wholly-owned legal entities controlled by Telkom.

Althon Beukes, CEO of OpenServe, claimed that since its founding in 2015, it had made significant strides in laying the foundation for its future success, focusing on launching innovative products and services.

“Since the inception of Openserve in 2015, we have made significant strides in laying the foundation for our future success by focusing on launching innovative products & services, providing superior interactions through our frontline staff, and leveraging our innovative digital channels to create a differentiated customer experience,” said Beukes.

Analyzing the Separation

On October 13, 2015, Telkom initially introduced Openserve to separate its wholesale and retail businesses functionally. This was a component of a settlement deal between Telkom and the Competition Commission, which was made public on June 17, 2013.

According to the agreement, Telkom will divide its wholesale and retail divisions and pay an R200 million fine for anti-competitive behavior between 1999 and 2004 and 2005 to 2009. The Competition Commission noted that Telkom admitted to charging exorbitant prices and participating in “margin squeezing” against rivals.

Telkom has now declared that the divisions will be structurally and legally separated in addition to their functional separation.

Althon Beukes stated that the separation puts Openserve in a better position to respond to the constantly shifting regulatory and competitive environment. He claimed that the news that Openserve will join with Google’s Equiano underwater cable system as a landing station is already evidence of the enormous advancements the company has made since 2015.

Equiano will travel from western Europe to Openserve’s facilities in Melkbosstrand in the Western Cape by way of the west coast of Africa. In a trading update on Tuesday, Telkom said that Openserve’s last-mile fiber network had a connectivity rate of 46.6 percent and reached over 890,000 houses in South Africa.