Massive R10 billion loss for Telkom
Telkom SA has published its abridged annual results for the year ended 31 March 2023, reporting a major loss.
Group’s revenue increased by 0.9% from R43.138 billion, up from R42.756 billion the year prior, with earnings before interest, taxation, depreciation and amortisation (EBITDA) dropping 19.8% to R9.5 billion from R11.9 billion before.
According to Telkom’ summarised consolidated statement of profit and loss, it made a profit of R346 million over the period compared to R2.6 billion the year prior.
However, it noted that certain financial information presented in the results constitutes pro forma financial information based on assumptions on future performance and hypothetical data.
Telkom said that the pro forma adjustments for the financial year in question include the impact of impairment of R13.071 billion and the related tax impact of R3.47 billion, restricting costs of R1.065 billion and the related tax impact of R288 million, and the invested capital write-up of BCX and Gyro of R10.479 billion.
Taking all of this into account, the group suffered a R9.97 billion loss.
The group said that it would not be declaring a dividend this year – marking the third year of a divided suspension.
Telkom’s board said that in light of the group’s cash position and the current economic environment, the resumption of a dividend should be postponed for at least another year.
“The board has concluded that in light of the group’s cash position and the current economic environment, the resumption of a dividend should be postponed for at least another year.”
Headline earnings per share were down to 134.6 cents per share compared to 575.3 cents in 2022 – a massive 76.6% decrease. On the pro format basis, the headline loss per share was recorded at a loss of 25.7 cents per share.
Telkom said its EBITDA losses were directly a result of higher handset costs and operational expenses.
Free cash flow, according to Telkom, took a massive blow, down 30.9% from 2022 to -R2.722 billion.
The group did, however, report an increase in mobile service revenue of R17.819 billion, up 1.8% from 2022 as well as an increase of 9.7% in fixed service revenue to R12.323 billion.
It added that revenue from information technology was up by 13.7% to R6.371 billion.
Telkom said that it faced challenging trading conditions. “The migration of revenues from legacy to newer technologies, our investment in the Mobile post-paid base to drive higher annuity revenue, and the impact of sustained load shedding put pressure on our operating costs,” said the company.
Serame Taukobong, the group CEO of Telkom, said that competition increased in the mobile, fibre and IT services businesses.
Taukobong said that in response to the increased competition, the company has embarked on a ‘cost transformation journey’ to return the Group’s profitability to above 25% in the medium term while driving revenue growth.
The group said that moves to restructure its businesses, including retrenchments in its workforce, will start reflecting in better performance in 2024 and 2025, while “ongoing investments in new technologies will become more apparent”.
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