Telkom fibre surge

Telkom has released its interim financial results for the six months ended 30 September 2024, revealing an 8.2% increase in reported profit for the period, along with a substantial increase in its fibre footprint.

Profit for the period increased from R788 million to R853 million, while group revenue increased by 1.9% from R20.98 billion to R21.38 billion.

One of Telkom’s key areas of cost savings was capital expenditure (capex), with the network operator cutting its network investment by R406 million compared to last year.

Its overall capex declined by 12.9% from R3.1 billion to R2.7 billion.

This included a substantial cut to fibre capex relative to last year, with Telkom slashing investment by 23% from R846 million to R651 million.

Despite this, it recorded significant increases in fibre subscribers, homes passed by Openserve’s fibre network, and homes connected.

Homes passed increased by 11.4% from 1,158,761 to 1,290,462.

Similarly, homes connected with Openserve fibre increased by 18.1% from 542,598 to 640,730.

However, it should be noted that Telkom considers any home with an Openserve fibre drop installed as “connected”. The connection need not be active.

That said, Telkom’s fibre subscribers increased by 10.5% from 461,104 to 509,617.

On the back of its double-digit fibre network growth, Telkom grew fibre data service revenue by 15.5% from R3.2 billion R3.7 billion.

“The results for the six months ended 30 September 2024 demonstrate a robust and steady underlying operational performance, building on the progress made in the previous year,” said Telkom Group CEO Serame Taukobong.

“We continued to monetize our diverse infrastructure asset base to build a strong cash-generating business for the long term.”

At the same time, Telkom made progress with the disposal of non-core assets to invest in future growth.

This includes the sale of its masts and towers business, Swiftnet, for R6.75 billion, which received final approval from competition authorities in September.

Taukobong said that Telkom’s revenue growth was driven by continued strong demand for its data propositions, including fibre data services.

Telkom’s mobile service revenue also grew by 10% and IT services revenue was up by 1.9%, offsetting ongoing fixed voice and legacy data erosion.

“Our next-generation broadband offerings, enabled by ongoing capital investment in our networks, have positioned Telkom as the best-value mobile network in South Africa,” said Taukobong.

“While we face challenges such as high unemployment rates and the need for economic growth to support our connectivity businesses, we are encouraged by positive signs in South Africa, including lowering interest rates and moderating inflation.”

Taukobong said that looking ahead, the strength of Telkom’s balance sheet remains a top priority.

This is to ensure the company stands resilient in the face of challenges, he said.

“We will endeavour to maintain into the second half of the year the good momentum we have experienced so far, which is pointing towards a sustained trend of positive free cash flow,” he said.

“It is important to emphasize that our focus on efficiency drivers is not solely about reducing workforce numbers but rather about optimizing performance across the board. We are actively reshaping the business construct without compromising our core strengths.”