Telkom released its financial results for the year ended 31 March 2023, which revealed a company struggling to make ends meet.<\/p>\n
Telkom tried to put on a brave face, saying it \u201cshowed resilience amid tough trading conditions\u201d in a press statement.<\/p>\n
It highlighted that revenue was up 0.9% to R43.138 billion, mobile customers increased 7.8% to 18.3 million subscribers, and mobile service revenue grew by 1.8%.<\/p>\n
However, delving deeper into the results document revealed that the company has numerous challenges, including rising debt and plummeting cash flow.<\/p>\n
Apart from Telkom\u2019s mobile and fibre divisions, there was a sea of red in the operators\u2019 latest financial results.<\/p>\n
Its Internet subscribers declined by 20%, fixed access lines declined by 21%, and fixed-line voice traffic is down 18%.<\/p>\n
Telkom\u2019s legacy copper business is essentially dead, which prompted an impairment of R13.017 billion on Openserve and Telkom Consumer.<\/p>\n
Even ignoring the tremendous impairment, Telkom struggles financially with flat revenue and rapidly increasing costs. This is clearly illustrated in its free cash flow and net debt.<\/p>\n
Telkom\u2019s free cash flow weakened to negative R2.722 billion from negative R2.080 billion the year before.<\/p>\n
It was mainly a result of a 45.0% decrease in cash generated from operations, impacted by the R3.218 billion decline in profit before tax compared to the prior year.<\/p>\n
Telkom\u2019s poor operational performance also impacted its borrowings. Net debt increased by 19.3% from R14.067 billion to R16.777 billion.<\/p>\n
The increased debt resulted in Telkom\u2019s net debt to earnings before interest, taxes, depreciation, and amortisation (EBITDA) ratio increasing from 1.2 to 1.8 times.<\/p>\n
To put this in perspective, in 2015, Telkom\u2019s net debt was only R123 million, with a net debt to EBITDA ratio of 0.02. It rapidly increased over the next eight years to where it is today.<\/p>\n
The charts below show how Telkom\u2019s net debt and net debt to EBITDA ratio increased over the last eight years.<\/p>\n
A version of this article was first published by Daily Investor<\/a><\/strong> and is republished with permission.<\/em><\/p>\n Telkom’s net debt has increased, free cash flow declined, and the CFO has warned it is burning through cash at an unsustainable rate.<\/p>\n","protected":false},"author":341108,"featured_media":467825,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_facebook_post_id":"","_sma_instagram_post_id":"","_sma_threads_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[19,3],"tags":[82835,35,109],"class_list":["post-496655","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-telecoms","tag-dirk-reyneke","tag-headline","tag-telkom"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/496655"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341108"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=496655"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/496655\/revisions"}],"predecessor-version":[{"id":496661,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/496655\/revisions\/496661"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/467825"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=496655"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=496655"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=496655"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2023\/06\/Telkom-net-debt-2015-2023.jpg\")
<\/a><\/p>\n![\"\"](\"https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2023\/06\/Telkom-net-debt-to-EBITDA.jpg\")
<\/a><\/p>\n
\nNow read:\u00a0Sipho Maseko said Telkom was worth R108 per share \u2014\u00a0but only wanted to pay R46<\/a><\/h3>\n","protected":false},"excerpt":{"rendered":"