Telkom share price dives as it cuts guidance

Telkom lowered its revenue and profit guidance for the medium term due to a slowdown in growth in its mobile business and a decline in its legacy unit, it said on Tuesday, as it reported an 2.5% rise in full-year earnings.

The shares fell as much as 8% in early trading in Johannesburg, touching a low of R37. They were last quoted at R37.83/share, down 6% on the session.

The telecommunications operator said headline earnings per share rose to 575.3c, boosted by lower finance charges and fair value movements. Group Ebitda slipped 0.5% to R11.9-billion, while group revenue fell 1.1% to R42.8-billion.

The majority state-owned operator now expects group revenue to grow at a mid-single-digit percentage over the next three years from mid- to high-single-digit growth.

Ebitda growth is also expected at mid-single digit from mid- to high-single digits.

“Telkom mobile has grown ahead of the market and secured a third market position. Going forward, we expect Telkom mobile to grow in line with its industry peers,” the operator said.

Mobile service revenue increased by 3.3% to R17.5-billion in the year ended 31 March, a significant slowdown from the previous year’s 34.5% growth when data demand surged due to people working and schooling from home.

‘Plateaued’

Meanwhile, mobile data revenue grew by 2.9%, also a slowdown.

Telkom said the prepaid surge slowed “as the share of wallet spend plateaued”. It continued to grow its prepaid customer base with average revenue per user (Arpu) normalising to pre-Covid-19 levels, in line with management expectations, it added. It grew its post-paid base and maintained high levels of Arpu.

However, its legacy fixed-line business remained under pressure as users migrate from traditional fixed voice to newer technologies.  — (c) 2022 Reuters