Telkom results – massive mobile data growth, fixed lines declining

Telkom has published its interim results for the six months ended 30 September 2015, which show that mobile data revenue increased 69% to R711 million.

The company’s net revenue increased 1.2% to R13.45 billion, while EBITDA, excluding the one-off items, improved 15.1% to R5 billion.

“Mobile service and subscription revenue increased 41% to R1.2 billion,” said Telkom.

Telkom’s drive to reduce costs also produced positive results, with operating expenses – excluding depreciation – decreasing 2.3% to R9 billion.

“During the period under review, Telkom continued with its efforts to transform the company and stabilise revenue. Operating revenue increased by 5.5% compared to the same period last year, spurred on by the continuing growth in the mobile business.”

Fixed voice declining

Telkom’s fixed line segment did not fare as well, with fixed voice revenue decreasing by 3% compared to the same period in 2014. Fixed access lines decreased 5.9%, from 3.53 million to 3.23 million.

“Data connectivity dropped by more than 5% compared to the same period one year ago, impacted by competitors’ self-provisioning of infrastructure.”

Excluding revenue from leased lines, fixed data revenue was up more than 4%, though.

“Telkom also achieved good growth in the consumer business with revenue from ADSL growing in excess of 5%.

The company said its new wholesale division Openserve will continue to modernise and expand its fibre network, and will spend “a minimum of R10 billion on FTTH” in the future.

Debt levels

Telkom’s debt levels increased over the period, with the main cash outflows including:

• Purchase of Business Connexion Group for R2.7 billion
• Payment of a R1.3-billion dividend
• Repayment of maturing TL15 bond of R1.16 billion
• Payment of voluntary early retirement and severance packages of R1.5 billion

“Capital expenditure rose by 20%, or R2.3 billion, compared to the same period one year ago. These funds went towards the expansion of Telkom’s mobile, fibre, and LTE networks.”

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