Business Telecoms18.06.2024

Telkom slashes network investment

Telkom has released its results for the year ended 31 March 2024, revealing strong profit growth and a significant reduction in capital expenditure.

The network operator invested R6.1 billion in its network during the 2023/24 financial year — down 17.1% from R7.4 billion the year before.

Telkom Group CEO Serame Taukobong said the company had taken a measured approach to capital expenditure during the financial year.

“Better-than-expected positive free cash flow of R424 million was driven by improved operational performance and our measured approach towards capital expenditure (capex) this year,” he said.

“The decrease aligns with our strategy and the cyclical nature of capital expenses.”

In June 2023, Telkom Group chief financial officer Dirk Reyneke said in an internal memo that the company planned to temporarily capex to save costs.

Reyneke told staff the company would defer 20% of the planned capex budget for the 2024 financial year to 2025.

Of its R6.1 billion capital expenditure during the financial year, R2.6 billion was invested in Telkom’s mobile business.

Its mobile capex significantly declined, dropping 30.2% from R3.7 billion in 2022/23.

“The decline in mobile capex spent was due to the investment in batteries in the prior year to mitigate the impact of accelerated load-shedding,” said Telkom.

Of the R2.6 billion in mobile capital expenditure, Telkom spent R972 million on spectrum.

Telkom added that its mobile business expanded by 2.5% to 7,738 sites during the year.

The network operator also cut its fibre investments, spending R200 million less in 2023/24 than in the previous year.

Only two aspects of Telkom’s business saw significantly increased capital expenditure: network rehabilitation/sustainment and its masts and towers business.

Telkom spent R278 million on network rehabilitation in 2023/24, up 48.7% from R187 million in 2022/23.

At the same time, investment in its masts and towers business increased from R224 million to R309 million.

Overall, Telkom reported a capex-to-revenue ratio of 14.2% for the financial year.

Looking forward, Telkom says its future growth will be facilitated by efficient capital expenditure in its mobile business and exploring radio access network sharing with other mobile operators.

Telkom grew its revenue by 1.6% during the financial year, from R42.53 billion in 2022/23 to R43.23 billion in 2023/24.

At the same time, its net profit grew by 443.6% compared to the previous year. Net profit sat at R1.88 billion as of 31 March 2024, up from R356 million as of 31 March 2023.

“This is mainly attributable to a 27.2% decrease in depreciation, amortisation, impairments, and write-offs, partially offset by a 48.0% increase in finance charges and fair value movements,” said Telkom.

Show comments

Latest news

More news

Trending news

Sign up to the MyBroadband newsletter