Telkom fixed line capex R30bn in next 5 yrs
In a statement posted on its website, Telkom said it is presenting an outline of its business strategy to members of the investment community in Pretoria today. No trading update will be provided, it added.
Telkom said the presentations include guidance relating to the fixed-line business for the financial year ending March 31 2007.
It said employee expenses to revenue are expected to be 20-22%, while its Earnings Before Interest, Tax, Depreciation and Amortisation (EBIDTA) is seen at 37-40% for the financial year ending March 31 2007. Capex to revenue is seen at 18-22% while the debt to equity ratio is expected at 50-70% for the period.
The presentations, posted on Telkom’s website, also reveal that operating expenditure excluding commitments increases are expected to be below inflation.
Telkom Chief Financial Officer Kaushik Patel, in his presentation, said this would be achieved by identifying non-core services with the aim of streamlining or outsourcing to eliminate inefficiencies and reducing supply chain costs by lowering inventory and identifying opportunities for procurement savings and waste reduction.
In his presentation, Chief Sales and Marketing Officer Wally Beelders said a key strategy would be to create growth opportunities beyond South Africa’s borders and to develop new age offerings in existing markets in order to supplement diminishing revenue streams with new ones.
This would be achieved, by among other things, aggressively growing data and converged IP services, increasing DSL penetration to 20% of lines by 2010, expanding outside South Africa and by building a leading South African ICT business.
Beelders said Telkom would focus on countries and businesses where it could add value and identified sub-Saharan Africa as a geographic focus.
In his presentation, CEO Papi Molotsane identified several key challenges for Telkom, including increasingly complex technology and products, more informed and demanding customers and tighter and rapidly changing regulations.
In addition, he pointed to growing competition, including the second national operator becoming operational during the year, and VANS being able to utilise VoIP.
Telkom’s key priorities would be customer centricity, revenue retention and growth, upgrading the network to grow new revenue streams and cost management, he said.
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