Telkom profits down
Announcing the Telkom Group interim results for the six months ended September 30, 2007, acting CEO Reuben September today said that headline earnings per share declined by 15.1% despite group operating revenue increasing by 8.3%.
September attributed the drop in the Group’s headline earnings to increased competition in the telecommunications landscape, price reductions as well as increased operational expenses incurred largely as Telkom accelerates building a first class Next Generation Network (NGN) capable of delivering converged Information, Communication and Technology (ICT) services to domestic and African customers.
Highlights of the Group financial key performance areas include:
- Group operating revenue up 8.3%.
- 4.8% decline in group operating profit.
- Group EBITDA margin decreased to 37.5%.
- 50.9% net debt increase and a net debt to equity ratio of 60.0%.
- Headline earnings decreased by 15.1%.
- Basic earnings decreased by 16.6%.
- Cash flows from operating activities decreased by 11.5%, cash flow utilised in investing activities increased by 71.3% and cash flows financing activities increased by 653.2% during the six months ended September 30, 2007.
“The Telkom Group has delivered continued revenue growth largely as a result of the 17.2% revenue growth delivered by the Vodacom Group. The fixed-line segment’s revenue increased by 0.5%,” said September.
He added: “This performance is reflective of the increased competition in the telecommunications landscape coupled with Telkom’s commitment to reducing the cost of telecommunications services through price reductions and significant value propositions to our customers.”
September further explained that the fixed-line segment faced significant operational challenges as a result of increased competition, fixed to mobile substitution, deregulation and rapidly changing business models within the ICT sector.
Against this background, Telkom had to defend and grow its revenue streams, emphasised September.
“Telkom has embarked on its mobile review strategy in order to drive the value of a converged services offering through our NGN for the benefit of all our customers as well as our shareholders. In addition, Telkom is undergoing a structural transformation in order to leverage efficiencies and capability management within the fixed-line business,” stated September.
“Furthermore, Telkom is positioning itself to take advantage of the future converged services environment that is fast becoming a global best practice. To this end, we are developing the capabilities to offer the full suite of converged services that encompass fixed, mobile, data and multimedia services, ” continued September.
He stated that Telkom’s infrastructure building process was progressing well to adequately meet the demands of bandwidth hungry applications.
This was particularly important, stressed September, as Telkom is a key partner in delivering the 2010 FIFA World Cup to the global community. “Our ability to do so seamlessly is dependent on the investment in our network.”
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