Telkom makes good progress on data-led strategy in the third quarter

Published Feb 20, 2024


Telkom SA’s share price lifted over 4% yesterday after it reported “good progress” in performance in the third quarter to December 31.

This was after compelling value propositions drove next generation (NGN) revenue growth and operating earnings in line with the data-led strategy, CEO Serame Taukobong said in a trading update yesterday.

Group revenue increased 2% to R11.31 billion, and group earnings before interest tax depreciation and amortisation (EBITDA) was stable at R2.48bn.

Mobile revenue was up 4.8% to R5.96bn. Mobile service revenue increased 7.1% and Mobile EBITDA was up 3.5% to R1.2bn.

Openserve fixed data next generation revenue grew by 6.2% and its EBITDA was up 7% to R1.01n. BCX’s revenue was marginally down at 0.7%. IT business revenue increased 13.1% to R2.12bn.

Swiftnet revenue increased 4.7% from additional tenancies on the masts and towers portfolio.

Taukobong said the group performance was pleasing against a strong comparative quarter. Cost reduction initiatives also contributed to improved operating EBITDA as they partially offset inflationary increases, increased bad debt provisions and the added cost of load shedding.

Telkom Consumer and Openserve advanced operating earnings by 20.6% and 7.0% respectively.

Overall group EBITDA was stable, despite continuing inflationary pressures on retail consumers and enterprises against a backdrop of muted economic growth in South Africa, he said.

Telkom said it was committed to meet its medium-term guidance for the 2024 financial year with a continued focus on cash generation and stringent capital allocation with expected capital expenditure for the year, better than indicated guidance.

Strategy was being prioritised through the proposed disposal of Swiftnet, the masts and towers business.

“Substantial progress was made on meeting the remaining agreed milestones under the exclusivity arrangement including the parties significantly progressing their negotiations to agree transaction agreements,” Taukobong said.

Higher recharges by prepaid mobile subscribers, ongoing rollout of fibre network to homes and enterprises by Openserve also drove revenue growth, supported by Swiftnet’s commercialisation of the masts and towers portfolio.

Enterprises’ demand for hardware and software remained healthy and grew in double digits at BCX, but overall revenues were impacted by the continued decline in traditional voice and data revenues, as customers migrate to NGN products.

“The continued uptake of our NGN products by retail and enterprise customers grew both active mobile and fixed subscribers. This, along with double digit increases in data consumption, bode well for the group NGN revenue, which grew by 5.1% offsetting traditional revenue declines.”

Mobile subscribers grew by 6.4% to 19.7 million while mobile data traffic increased by 19.7% to 370 petabytes.

“We have worked relentlessly at mitigating the risk and impact of load shedding on our operations and capital expenditure investments made in alternative energy sources (including solar power and lithium-ion batteries) to improve our mobile and fibre networks’ resilience yielded results.

Diesel consumption and related costs at Openserve have decreased and network availability for our mobile network availability improved to 94% from 89%,” the group said.