Telkom slashes mobile and fibre network investment

Telkom has released its interim results for the six months ended 30 September 2024, revealing a significant reduction in expenditure for its fibre and mobile networks.

Altogether, the network operator’s capital expenditure across all operations declined by 12.9% from R3.14 billion in the period ended 30 September 2023 to R2.74 billion in the same period in 2024.

Regarding continuing operations, Telkom’s capital expenditure declined from R3.1 billion during the reporting period in 2023, to R2.54 billion during the six months ended 30 September 2024.

“Our network architecture benefited from R2.5 billion of investments dedicated to expansion and upgrades, while ensuring that capital intensity at 11.9% was at the lower end of the guided 12-15% medium-term objective,” said Telkom.

The company noted that its funding framework focuses on growth areas and aims to improve on invested capital while ensuring a healthy balance sheet.

Looking at investment in its fibre network, operated by Openserve, Telkom spent R843 million expanding its network during the six months ended 30 September 2023. This dropped to R651 million in 2024, representing a 23% decline.

Investment in its mobile network declined by 20.1% year-over-year from R1.6 billion to R1.3 billion.

“Our mobile business investment focuses on high-demand areas as we aim to lead in data. The business expanded its mobile footprint by 1.7% to 7,814 integrated sites,” Telkom said.

It added that targeted “smart capex investments” in network infrastructure had improved customer experience on its networks, noting that its fibre business holds an Interaction Net Promoter Score of 75 and high core network availability at 99.99%.

Telkom has shifted its capital expenditure approach significantly in the past.

Its annual results for 2022/23 showed that the network operator had increased its mobile capex by 35% compared to the previous financial year, from R2.8 billion to R3.7 billion.

However, while the mobile network received more money, Telkom’s fibre network received far less, with the operator cutting fibre capex by 25% from R2.4 billion to R1.8 billion.

In the following financial year, Telkom slashed its mobile and fibre network expenditure.

Mobile capex declined by 30.2% to R2.6 billion from R3.7 billion, and the company also spent R200 million less on its fibre network.

However, Telkom noted that the decline in mobile capex was due to investments in battery backups to mitigate load-shedding in the prior financial year.

The table below shows a breakdown of Telkom’s capital expenditure during the six months ended 30 September 2024.