Telkom overtakes Cell C after COVID-19 lockdown

Telkom has provided an update to its shareholders on how its business units were impacted by the COVID-19 pandemic, stating that it is now the third-biggest mobile operator in terms of subscribers and revenue.

According to the operator, its BCX and Small Medium Business (SMB) units were negatively impacted by the national lockdown as corporate customers were under severe financial pressure.

“Enterprise customers reduced IT spend in the first half of the year and postponed some of their capital investment projects as a response to the heightened uncertain environment caused by COVID-19,” Telkom said.

It also claimed the migration to work from home negatively impacted its enterprise fixed business as the usage was diverted to mobile connectivity, leading to a significant decline in fixed voice revenue.

However, according to Telkom, its consumer business had benefitted from the increased demand from people working from home and online schooling.

Mobile data, which contributes approximately 70% of the mobile business, was the main driver of growth driven by strong growth in mobile traffic.

It noted that it is now the third-largest mobile telecom in South Africa from both a customer and revenue perspective.

“The mobile business continued to gain market share from its peers both from a customer and revenue perspective to become the third-largest mobile telecom in South Africa in a period of ten years of establishment,” Telkom said.

“Overall, the Group revenue showed resilience in the face of this pandemic,” Telkom said.

Telkom further noted the migration to working and studying from home resulted in an increase in demand for fixed connectivity from its wholesale fibre division Openserve, which lead to an improved fibre-to-the-home (FTTH) connectivity rate.

Similar trends were seen across its DSL Pure connect product portfolio, it added.

Restructuring programme

Telkom added that its restructuring programme, which involved the axing of 6,000 workers earlier this year, has assisted in its sustainable cost management programme to protect Group EBITDA and margin.

According to the operator, the benefits of this restructuring were realised in line with its management’s expectations.

Furthermore, Telkom claimed that its liquidity remained resilient with a stable balance sheet and that no debt has been raised since 30 March 2020.

“Management remains confident with cash release initiatives target of R700 million to R1 billion for the year as it continues with its working capital optimisation.”

It also notified its shareholders it has entered into a payment plan with the South African Revenue Services (SARS) to pay an outstanding liability (including interest) of R870 million over a period up to 31 March 2021.

“This will be funded out of our monthly cash flows,” Telkom said.

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Telkom overtakes Cell C after COVID-19 lockdown