Telkom faces significant headwinds: Moholi
Announcing Telkom’s Interim Results for the six months ended 30 September 2012, Telkom Group CEO Nombulelo Moholi said that the company is “confident that the headwinds we face can be overcome”.
“Telkom is engaged in constructive dialogue with its key stakeholders to chart a successful way forward. While we anticipate government [will be] providing an understanding of its policy direction, we remain focused on achieving our current business strategy,” said Moholi.
Following events at the company’s recent AGM, where four non-executive directors were not re-elected to the board by a majority of shareholders, the Telkom board has been reconstituted with the appointments of Jabulane Albert Mabuza, Kholeka Mzondeki and Leslie Maasdorp.
The board has also elected Mabuza as the Chairman. The next step in the process will be the appointment of further directors and board committees.
Moholi said that Telkom’s short-term priorities were to ensure management stability and to focus on business priorities.
“It was also essential to ensure that customer service was not impacted by recent events at the corporate level, and that ongoing constructive dialogue with minority and majority shareholders continues,” said Moholi.
Nombulelo Moholi
The company’s key business priorities included:
- Achieving leadership in data;
- Growing Telkom Business revenue by diversifying its service portfolio;
- Regaining competitiveness in the consumer market;
- Consolidating Telkom’s position as the wholesaler of choice;
- Focusing on profitable market segments and services;
- Enhancing the company’s operational efficiency.
Telkom’s future performance hinged on the company’s ability to address several key issues, including filling an execution capability gap; resolving the future of the fixed-line business; an inappropriate termination rate regime; a rigid cost structure; regulatory obligations, and government engagement.
The results for the half-year to September 2012 reflect the ongoing challenging environment for fixed-line incumbents.
Salient features of the results included:
- Revenue declined marginally by 1.5% to R16.1 billion;
- Operating expenses increased 1.6 % to R15.6 billion;
- Basic earnings per share decreased 64.5% to 30.2 cents;
- Free cash flow of R1.5 billion;
- HEPS from continuing operations decreased by 80.6% to 37.2 cents (largely due to the impact of the provision for the penalty handed down by the Competition Tribunal, higher employee expenses due to annual salary increases and lower fixed-line revenue).
There were also several areas of improvement recorded in the six months under review, including:
- ADSL subscribers increased 5.8% to 841,831;
- Calling plan subscribers increased 5.7% to 843,491;
- Managed data network sites increased 8.3% to 40,284;
- Active mobile subscribers of 1,495,083 with a blended ARPU of R68.62;
- Mobile business revenue increased by 198.3%, largely as a result of increased ARPUs and number of revenue generating subscribers.
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