Telkom sees strong mobile subscriber growth

Telkom on Monday (8 February) published a market update for the nine months ended December 2020, showing strong mobile customer growth.

Group revenue climbed 0.9% year on year to R32.43 billion, driven by growth of 40.7% (R12 58 billion) in mobile service revenue, while earnings before interest, tax, depreciation and amortisation (EBITDA) grew 8.5% year on year to R8.64 billion.

The group reported 25.9% growth in active subscribers to 14.9 million, and a 23.9% increase in blended average revenue per user (ARPU) to R108. “The post-paid market remains challenging in terms of new connections due to consumers being under pressure,” it said.

However, strong growth was seen in post-paid YTD ARPU of 15.6% to R212. “The prepaid market remains the driver of new connections, prepaid customers grew by 30.8% to 12.3 million,” Telkom said.

Mobile data revenue grew by 46.2% to R9.05 billion, driven by strong growth in mobile traffic of 64.4% and 27.0% growth in mobile broadband customers to more than 10.0
million. This was enabled by a 9.7% increase in network rollout to 6,135 sites, it said.

Group chief executive officer Sipho Maseko, said: “Telkom’s broadband led strategy and the decision to invest in infrastructure ahead of demand enabled us to meet the surge in demand for broadband services.

“These results also reflect the success of our financial strategic objectives which include building financial resilience through sustainable cost management, cash preservation and disciplined capital allocation as we weather the impact of Covid-19 in our businesses.”

Telkom said that its information and communications technology company, BCX performance remains under pressure with the overall market environment challenging albeit with some economic recovery with YTD revenue down 9% to R11.86 billion.

The operator said that pressure in the Openserve performance trends witnessed in the first half of the year continued in the third quarter of the year with YTD revenue down 12% to R10.23 million. Openserve is the group’s fibre broadband provider.

“While we saw an increased need for data in the period, fixed voice usage continued to decline, therefore Openserve performance remains under pressure. The investment
in the network has enabled it to carry increased traffic of 28% across its fixed line network, it said.

The group reported an increase in demand for fixed connectivity resulting in an improved FTTH connectivity to 56.7% compared to 46.6% in the prior period.

“Whilst we were faced with supply chain challenges resulting from international lockdown in the third quarter, we have continued to drive the expansion of our fibre footprint as evidenced by more than 25,000 new homes passed with fibre in the period,” it said.

Gyro masts and towers meanwhile, sustained its growth trajectory with YTD revenue up 6.2% to R931 million as it commercialises its portfolio and is on track to achieve its target
tower build plan and increase the number of tenants, as reported in the first half of the year.

Telkom said it is ready to participate in the spectrum auction and supports the urgent release of high demand spectrum. “However, Telkom remains concerned about the non-availability of spectrum in the 700 MHz and 800 MHz bands for commercial use and the general construct of the licensing dispensation.

“The television broadcasters still occupy 700 MHz and 800 MHz bands and to date, there is no definitive timeline on when they will be migrated. Insofar as the design of the licensing process is concerned, Telkom is concerned that it disregards the prevailing structural competition challenges that beset the mobile sector,” it said.

Read: Vodacom points to strong growth in financial services business

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Telkom sees strong mobile subscriber growth