Telkom revenue flat, but mobile shows strong performance

Telkom has released its financial results for the year ended 31 March 2018.

Telkom group CEO Sipho Maseko stated in a SENS announcement that “the year was characterised by a tough economic environment, political uncertainty, and intense competition”.

“We felt the impact of the weak economic environment, as the private and public sectors respectively deferred and lowered their information communications and technology spend,” said Maseko.

The result was that group operating revenue at Telkom was flat, at R41 billion.

Group EBITDA was down 3.6% to R10.5 billion, with an EBITDA margin of 25.7%.

HEPS was down 18.4% to 597 cents per share, while capex was also down 8.6% to R7.9 billion.

An area were Telkom showed a stronger performance was in the mobile sector, with its mobile service revenue up 47.2% to R5.1 billion.

This follows positive consumer feedback on its FreeMe mobile packages and fixed-LTE specials, which are well-priced compared to offers from competing networks.

Maseko stated that the group’s revenue was broken down as follows:

  • Openserve – R17.5 billion
  • Consumer – R17.1 billion
  • BCX – R21.1 billion
  • Other – R5.5 billion
  • Eliminations – (R20.4 billion)

Mobile business key

Maseko said that Telkom’s mobile business is now a key driver of growth in the group, offsetting the decline in BCX and Openserve.

“Voice is impacting our businesses across the group as a traditional technology – customers are migrating from circuit voice to voice over internet protocol (VoIP). We have implemented strategies to manage the decline in voice revenue while we migrate customers to VoIP and grow our new generation revenue streams,” said Maseko.

“I am pleased that the new generation revenue streams, such as mobile and data, are now compensating for the decline in the traditional business. Our focus going forward is to increase the contribution from the new generation revenue streams.”

“Despite their lower margin compared to traditional revenue streams, the new generation revenue streams will ensure Telkom’s long-term sustainability,” said Maseko.

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Telkom revenue flat, but mobile shows strong performance