Telkom fixed-line customers cancel their accounts in big numbers

Telkom has released its interim results for the six months ended 30 September 2018, which show a continued drop in fixed-line subscribers.

The results show that the company’s fixed-line user numbers continue to drop, with the latest results revealing a 9.6% year-on-year decline in fixed access lines.

The base dropped from 2.84 million to 2.56 million from September 2017 to September 2018.

This resulted in total fixed-line traffic dropping by 12.7% to 5.63 billion minutes.

Telkom reported that its fixed broadband subscribers – which includes DSL and fibre lines – were down 2.5% to 974,181.

The mobile business was a completely different picture, however, and Telkom reported an increase in mobile broadband subscribers of 66.8% to 4.75 million.

Mobile subscriber numbers were also up, increasing by 50% to 6.54 million. This consisted of 4.87 million prepaid users and 1.66 million postpaid users.

Headline financials

Looking at the bigger picture, Telkom said its group operating revenue was up 5.2% to R20.8 billion, while mobile service revenue was up 53.8% to R3.5 billion.

As expected, fixed service revenue was down – dropping 7% to R10.7 billion.

EBITDA was up 2.9% to R5.3 billion and IT revenue was up by 3.3% to R3.7 billion.

Telkom group CEO Sipho Maseko said the company delivered a satisfactory performance despite a challenging operating environment.

“The mobile business was a growth driver with an impressive service revenue growth of 53.8% to R3.6 billion supported by strong customer growth of 50% to 6.5 million, with a blended average revenue per user of R104, as our affordable data-led products and broadband product propositions continue to resonate well with our customers,” said Maseko.

“The accelerated performance was underpinned by increased capital expenditure and increased store footprint.”

Maseko said that Openserve and Gyro also contributed positively to the group.

“Openserve marginally increased its revenue, despite the decline in traditional revenue, while Gyro continued to grow external revenue and the mast and tower portfolio tenancy ratio.”

The negative impact of the weak economy was felt by BCX, however, and the unit is under pressure.

“In addition to the weak economy, BCX’s performance continues to be impacted by the decline in voice revenue.”

Maseko added that despite a drop in fixed-line users and revenue, new revenue streams were “compensating for the decline in our traditional revenue streams” – albeit at a lower margin.

“Mobile and fibre remain key capex focus areas with impressive returns in mobile service revenue,” he added.

“Our fibre to the home connectivity rate has improved to 35.6%, when compared to 24.5% in the prior year.”

Maseko added that as the business evolves, it will assess its skills in the company – which may result in the reorganisation of functions and possible redundancies.

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Telkom fixed-line customers cancel their accounts in big numbers