• Productive
    capital

    Performance snapshot

  • Achievements

    Accelerated home
    connectivity rate

    Growth in fibre to the
    base stations and fibre
    to the business

    Reduced cost to pass
    and connect a home

    Challenges

    Evolution
    fixed business

    Increased
    competition in
    fibre broadband

  • Performance summary

    The technological shift from legacy to next-generation technologies such as fibre and LTE/LTE-A1 as new sources of revenue continue to impact Openserve’s performance. This was compounded by a rapid decline in traditional high-margin fixed-voice business, in line with global trends.

    Revenue declined by 10.7% to R15 134 million, driven by a 25% decline in fixed-voice revenue due to customers migrating from legacy to next-generation technologies.

    The impact of the fixed-voice decline on EBITDA is significant as it has high margins. Underlying EBITDA reduced by 39.4% to R3 813 million. Our cost optimisation programme, including extracting efficiencies from network modernisation and service delivery optimisation, was not sufficient to offset the flow-through of the fixed-voice revenue decline. Due to the pressure on revenue and the resulting change in revenue mix, EBITDA margins declined from 37.1%* to 25.2%*.

    We will continue to focus on cost efficiencies to try and offset adverse impacts of the fixed-voice revenue decline, unfavourable economic conditions and competitive pressures.

    1 Long-term evolution/long-term evolution advanced.
    * Excludes the impact of IFRS 16 and VSP and VERP costs.
  • Material trade-offs
    considered in FY2020
    KPIs and key measures
    FTTH
    connectivity
    rate up
    9.4 ppts to    		 Fibre to
    the base
    stations
    up    		 Fibre
    to the
    business
    up
         
    48.2%
    9.8%
    25.9%
  • Key strategic focus areas

    Modernise
    the network

    Commercialise
    the network

    Transform
    service delivery



Modernise the network

Our journey towards an all IP network continues to drive down the cost per bit and has enabled us to do so over the past few years.

The ongoing investment in next-generation technologies continues to scale up the network and cater for the growing broadband demand. During the year, we invested R2.7 billion to modernise the network. To date, we have more than 2.4 million homes with fibre to the cabinet and have passed approximately 455 600 homes with fibre to support our broadband strategy.

This investment enabled a 33% reduction of legacy services footprint by upgrading them to next-generation access technologies.


Commercialise the network

Our ability to commercialise our network footprint has enabled us to mitigate the pressure on revenue. The growing data demand in the enterprise market is catered for by providing fibre-based ethernet links, which increased 29.5% to 47 179 services connected. Fibre to the base station increased by 9.8% to
7 704 base stations as mobile operators expand their networks.

Our investment in fibre to the home (FTTH) was rationalised to focus on areas showing a propensity for higher connectivity rates. The FTTH connectivity rate improved from 38.4% to
48.2% – the highest in the market.

In line with our cost reduction drive, we reduced the unit cost to deploy fibre to the home (FTTH) by 40% and we continue to look at opportunities to optimise the cost further. This will enable more aggressive future deployment.

Fibre ecosystem
Transform service delivery

Through modernising our network, we extract operational efficiencies by utilising digital processes, which improve our service delivery capability. This improved the average time to repair by 27.3% and the average time to install next-generation access services by 28.4%.

Improved operational efficiencies

Our drive to migrate legacy access technologies plays a significant part in improving productivity. Assurance visits reduced by 42.6% and the redispatch rate reduced by 42.3%. This progress gave us the confidence to position Openserve to deliver a seamless client experience across all segments.

The 25.4% improvement in NPS (Net Promoter Score) results is testament to our quest to improve service delivery.


Review of wholesale pricing

During the year Openserve worked on introducing new end-to-end fixed wholesale services. The Competition Commission viewed our redesigned offering favourably. It addresses the concerns related to the IP Connect product during the Data Services Market Inquiry.

Openserve redesigned the broadband ecosystem, which includes Openserve fibre broadband, resell DSL and IP Connect, to lower data prices. We seek to achieve a technology-agnostic approach to the revised broadband suite of products. Our new broadband access product suite will include solutions that are provided from the customer premises to the hand-off point as an aggregated offering. This will enable competitiveness regarding complete provisioning of end-to-end fixed-broadband solutions.


Looking forward

We will continue our strategy to commercialise and modernise the network and transform service delivery. Considering the COVID-19 pandemic and the associated economic downturn, the need for affordable and universal broadband access has been exacerbated exponentially.

Our network engineers are constantly studying data consumption patterns and trends across the day to ensure we manage our peak capacity. Concurrently, we continue to plan and strengthen our core, aggregation and access network to meet our client and customer demands throughout the day. Where required, upgrades to our networks are being proactively implemented. We are confident that our data-led design of the network will hold us in good stead to cater for the current surge in traffic and the increase in expected data consumption generated by the speed upgrades implemented by Openserve for qualifying broadband customers.

Openserve also launched a Pure Connect offer with a promotional free install and one-month rental. Pure Connect, was from 15 May on our existing copper infrastructure including our MSAN and ISAM networks, that are largely underpinned by high-speed fibre backhaul. In addition to our high-speed Pure Connect offerings (10 Mbps, 20 Mbps and 40 Mbps), the product offering will include an entry-level 4 Mbps Pure Connect Lite offer. Orders will be placed directly with Openserve and the traditional public switched telephone network (PSTN) voice services will not be supported with the Pure Connect offer.