Telkom reports surprisingly strong top-line growth

Telecommunications group Telkom reported surprisingly positive quarterly results on Monday, with revenue up nearly 4% year on year on the back of improvements in various operating subsidiaries.

Group revenue rose year on year by 3.8% to R10.7-billion, helped along by a 5.2% increase in mobile service revenue as consumers used more data. Mobile data revenue rose nearly 10% on the back of a 25% surge in mobile data traffic and a 6.9% improvement in subscribers.

Other highlights of the quarter included:

• Wholesale networks subsidiary Openserve growing its fixed-data new-generation revenue by 10.6%;
• Fixed-data traffic up 13.3% to 512PB;
• Home fibre connectivity rate of 46.5%, with number of homes connected up by nearly a quarter; and
• BCX revenue up 2.9% driven by IT business growth of 17.5%.

“Telkom has started the 2024 financial year with good momentum,” said group CEO Serame Taukobong. “Group performance was pleasing in the face of rolling power outages, muted economic growth, continuing inflationary pressures on consumers and an intensely competitive landscape.”

Despite the positive performance at the top line, however, Ebitda – a measure of operating profit – fell by 4.2% to R2.2-billion.

“We are pleased that cost savings from our recent labour restructuring process offset the impact of load shedding as planned, but the legacy revenue declines along with higher ECL (expected credit loss) provisions weighed on overall group profitability,” Taukobong said. “The group will continue improving its cost base to improve profitability in the medium term.”

Telkom layoffs

It said the cost benefits derived from recent layoffs was “partially negated by the additional spend on diesel to mitigate the impact of load shedding, as well as a slight increase in direct costs, which were negatively impacted by the product mix for the quarter”.

“We also experienced an increase in the provision for bad debts, with consumers under increasing strain from the macroeconomic environment.”

Read: Telkom insists it still needs regulatory support

Taukobong said the cost of load shedding has “now largely been incorporated in our operating cost base but will continue to impact group profitability”. The group is investing heavily in the resilience of its mobile and fibre networks. It is also switching from diesel to lithium batteries at many of its high sites.  – © 2023 NewsCentral Media

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