We nearly ditched mobile: Telkom CEO
Telkom CEO Sipho Maseko says that the group nearly ditched its under performing mobile arm.
Maseko was speaking at the company’s headquarters on Monday (8 June) amid improved financial results that saw Telkom re-introduce a dividend for the first time since 2011, and echoes his comments in May last year that Telkom Mobile was not sustainable in its current format.
“On the mobile side we experienced continued financial losses, and a standalone path is not sustainable going forward,” Maseko told staff on 12 May 2014.
However, Maseko said on Monday that the mobile business is very close to breakeven. “We were almost willing to throw in the towel – how do we derisk the mobile business,” he said.
He said that he metrics are getting better – data revenue has improved, and subscribers have increased.
“The management response has been pretty phenomenal.”
Telkom and MTN South Africa remain in discussions regarding the potential extension of an existing roaming agreement, more than a year after the parties first came together.
MTN signed an agreement with Telkom in March 2014, which would see it take over financial and operational responsibility for the rollout and operation of Telkom’s radio access network (RAN).
“The thesis has not changed,” Maseko said. “There is obviously still a deal on the table…regarding MTN…a deal we are committed to with MTN.’
“We’ve been able to encourage momentum and progress,’ Maseko said of the mobile arm’s performance.”
“The transaction was never meant to save mobile – everything we do on top of this needs to support that,” the chief executive said.
On Monday the group declared a dividend for the first time since 2011, after reporting a 60% rise in headline earnings per share for the year ended March 2015.
Active mobile subscribers improved 21.2% to 2.187 million, from 1.8 million before, with post‐paid subscribers up 52% to 579,125.
Mobile data revenue increased 50.6% to R988 million, the group said.
Telkom highlighted a 19.5% rise in average revenue per user, to R75.05, from R62.79 before.
Mobile voice and subscriber revenue increased 46% to R717 million, from R491 million before.
Mobile capital expenditure decreased markedly, down 64.8% to R481 million, from R1.368 billion, ‘due to the shift to a more concentrated rollout in major metropolitan areas’.
In November, David Shapiro, deputy chairman at Sasfin Securities forecast the death of Telkom Mobile.
Speaking on Business Day TV, Shapiro said that mobile telecoms is simply too capital intensive for new operators to bring competition to the market.
“And certainly Telkom [Mobile] you can just write off. They [Telkom] have to consider other strategies.”
“My view is that you will not see Telkom [Mobile] or Cell C in a few years. It will only be Vodacom and MTN,” Shapiro predicted.
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