Telkom's Copper Crisis Signals R1-Trillion Mobile Opportunity in SA

TELKOM’S COPPER COLLAPSE OPENS A R-TRILLION MOBILE MARKET

Telkom’s copper network, once the backbone of South Africa’s telecommunications monopoly, has become economically unviable. The numbers tell the story plainly: a customer base that exceeded 5 million at the turn of the century shrank to just 609,000 by 2024, a contraction that accelerated after the company discontinued prepaid copper telephone services in 2019. The final decommissioning of its post-paid copper service is still ongoing.

That collapse was not simply a technology story. It was a market structure story.

Prepaid mobile services offered a fundamentally different financial model from the fixed-line subscription contracts that Telkom’s legacy infrastructure required. Customers could purchase connectivity in small increments, without long-term commitments or the capital cost of copper cabling to individual properties. For operators, wireless networks sidestepped the chronic problem of copper theft, which had steadily eroded the physical and financial viability of fixed-line assets. The economics favoured mobile from both sides of the transaction.

The scale of the resulting market shift is striking. In 2002, only 20% of South African households owned a cellphone, while 15.2% had both a cellphone and a landline. By 2025, 93.8% of households had only a cellphone, 2.5% had both types of service, and no households relied solely on fixed lines. Meanwhile, the share of households with no telephone access at all fell from nearly 55% in 2002 to 3.7%, or roughly 740,000 households, by 2025.

Telkom’s original mandate, dating to the 1990s and early 2000s, required it to extend coverage to areas underserved during apartheid. Millions of newly connected households subsequently disconnected because they could not sustain subscription fees. Prepaid mobile filled that gap, enabling a form of financial inclusion that fixed-line economics could not support.

The mobile market has since generated significant downstream economic activity. Informal traders have adopted mobile-based money services, including e-wallets and SIM-connected card machines, expanding their commercial reach beyond cash transactions. According to the Independent Communications Authority of South Africa, 91% of people had smartphones by 2019. Access to government services, job-seeking platforms, and financial services for previously unbanked populations has followed.

The same infrastructure has also opened new risk exposures. South Africans wagered R1.1 trillion on betting platforms in 2024, a figure that reflects how efficiently mobile networks distribute access to online gambling. Cybercrime and scams have scaled alongside legitimate financial services.

Structural gaps persist. Mobile data pricing remains a constraint on affordability for lower-income households. Coverage and reliability are inconsistent in rural and remote areas. The 3.7% of households still without any phone connectivity face material barriers to accessing government services, including the R370 Social Relief of Distress grant for unemployed people. These gaps represent both a market failure and a residual investment opportunity, depending on whether operators and policymakers can construct a viable commercial case for last-mile connectivity.

The broader question now is whether the mobile operators who displaced Telkom’s copper monopoly will face their own structural disruption. Data pricing pressure, rural coverage obligations, and the continued rollout of fibre-based alternatives to mobile broadband will test the economics of the prepaid model that reshaped South African telecommunications over the past two decades.