The fixed-line business faces challenges with increased competition and pricing pressures in its traditional high margin, predominantly retail markets, Telkom said on Monday, while announcing its annual results.

Telkom said its headline earnings per share fell 4.4 percent to 1634.8 cents per share for the year to 31 March, 2008.

Fixed-line domestic local and long distance voice revenue dropped from R7.6-billion at 31 March, 2007 to R6.3bn at 31 March, 2008, said Telkom's Chief Executive Reuben September.

Growth in demand was in the lower margin, wholesale and data markets and this necessitated increased investments in the provisioning of backbone networks and support systems.

September added: "The fixed-line segment is gearing up to deliver the full suite of converged services to a far greater extent in South Africa and Africa.

"Given its ubiquity and network management capabilities, we believe the fixed-line segment is well positioned to deliver data and value-added data managed services at speeds and quality levels superior to its competitors."

September said that Telkom's ADSL subscribers grew 61.2 percent to 412 190, just short of Telkom's aggressive target.

"Telkom is expanding its ADSL footprint, increasing bandwidth to support applications such as video services and using its Next Generation Network to facilitate innovative broadband solutions."

Telkom's ADSL footprint now covered 92 percent of the network and coverage in traditional township areas increased to 69 percent.

A consortium consisting of Mvelaphanda and Och-Ziff Capital Management Group is presently in negotiations to buy Telkom.

Sapa