Telkom misses ADSL target
Telkom missed it’s fixed-line EBITDA margin target for 2008 of 37-40%, reporting a margin of 36,3%. Group EBITDA margin also decreased from 38,3% to 36,6% and is mainly “attributable to flat revenue in the fixed-line business”.
It sees the EBITDA margin declining to between 32 and 36% in the year ahead. ADSL subscribers grew 61% to 412 190, with the company falling short of its “aggressive target” of 420 000. ADSL average time to install improved to 19 days (2007:23). The company is also seeing very positive results in its Do Broadband packages. The total here increased by 245% to 119 288.
The board of directors, though, say they are determined to put themselves in a position where they can forcefully drive the creation of value for shareholders.
Telkom’s board and management team say they “well aware that the price of the share has not been reflecting the underlying value of the fixed-line business and are committed to addressing this”.
After the prohibition of the Telkom/BCX deal by competition authorities last year, Telkom says it is now pursuing the “acquisition of a data centre business outside of South Africa as we move up the converged ICT value chain”. The company says it is “difficult to make data centre acquisitions in South Africa”.
Telkom posted a massive drop in fixed-line voice revenue at R6,3bn (2007: R7,6bn).
Internet access (Telkom Internet) revenues increased 29,1% to R1,2bn.
Telkom’s group operating revenue grew 9% to R56bn, with operating profit flat at R14,482bn.
Fixed-line revenue grew negligibly to R32,5bn, with operating profit dropping by 6% to R8,1bn.
Vodacom posted operating revenue of R24bn, operating profit is R6,2bn.
The group posted headline earnings per share of 1634,8c, a 4,4% drop from last year’s number.
Interestingly, Telkom now mentions mobile voice as a target. The company says the “shareholders agreement with Vodafone has prevented Telkom from entering into the mobile voice market. The discussion with Vodafone Plc regarding the sale of our 50% stake in Vodacom, as announced, is intended to remove this impediment.” This means that Telkom has aspirations of going head to head with its subsidiary. Telkom has appointed Huawei to build its fixed-wireless and mobile data network.
The company says it has become increasingly uneconomical to replace copper with copper.
The Telkom board as approved the establishment of the Telkom management services company. Telkom envisages this unit providing telecommunications management services to operators in Africa. This company will also take over the management contracts of Telkom’s African businesses Multi-Links and Africa Online.
Clarity is expected on Telkom Media stake towards the end of this month. The company says “a potential anchor investor has been identified to take over a substantial portion of Telkom’s investment in Telkom Media.”
Telkom declared an ordinary dividend of 660c (2007:600c), however no special dividend was declared.
Telkom 2008 results discussion
Moneyweb
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