Telkom says that active mobile customers on its network increased 36.3% year on year to 16.1 million.
It said in a trading update for the quarter ended June 2021, that mobile data revenue grew 11.1% supported by growth in mobile broadband customers – up 30.9% to 10.5 million, representing 65.6% of active customers.
Group revenue was up 3.5% year on year to R10.62 billion, mainly driven by the mobile business. Fibre to the home grew by 32.2% to 306,837 homes, representing an FTTH connectivity rate of 50.1%, it said.
Mobile service revenue grew 13% to R4.44 billion. Telkom said its postpaid customer base was relatively flat compared to the prior year at 2.6 million with postpaid ARPU up 3.8% year on year to R221.
The prepaid market remains the driver of new connections. Prepaid customers grew by 46.8% to 13.5 million. In the quarter under review, 744,485 prepaid net additions were recorded.
Prepaid ARPU declined by 15.3% to R68 compared to R80 reported in the prior year due to the significant slowdown in working from home and online schooling, Telkom said.
Mobile data revenue grew by 11.1% to R3.2 billion, supported by a 30.9% growth in mobile broadband customers to 10.5 million, which represents more than 65% of the group’s active customer base.
Capex of R534 million was invested in coverage, with 6,646 base stations to date. This reflects an 8.8% year on year increase in base stations, it said.
Group chief executive officer, Sipho Maseko, said: “Telkom published a solid set of results for the first quarter of the year in a challenging trading and economic environment. Group revenue and EBITDA grew 3.5% and 7.3% respectively, demonstrating recovery in topline revenue and strong profitability compared to the prior year.
“Our sustainable cost management continues to deliver positive results, culminating in Group EBITDA growing faster than revenue despite a salary increase of an average of 6.0% across the group.”
He said that despite the South African economy gradually opening, customers remain under severe financial pressure due to loss of jobs, reduced income and liquidation of small businesses.
“We witnessed a continuing change in consumer behaviour in the postpaid consumer market. As customers seek to manage their spend, we saw a reluctance to renew postpaid contracts with some customers opting to switch from postpaid to prepaid propositions.”
In the Enterprise segment, investment lags the economy as the country grapples with the Covid-19 third wave with many Small and Medium Entities (SMEs) having to close their businesses in these challenging times.
“What has been encouraging is the Mobile business sustaining its growth trajectory despite a very strong prior year first quarter, with postpaid ARPU holding steady at around R220,” said Maseko.
Telkom said its consumer business revenue grew 8.3% to R6.52 billion driven by growth in mobile revenue. “This was partially offset by the decline in fixed-line business due to continued migration to next-generation technologies such as LTE and fibre and ongoing pressure in the SME segment.”
BCX under pressure due to a weak economy
The South African economy continues to be under pressure due to the impact of Covid-19, the group said. BCX, which serves all the sectors of the economy, has performed in direct correlation with decreased South African GDP growth.
“We continue to see sluggish IT spend and investments by corporates as the country battles with the impact of Covid-19 and the effects of restrictions on parts of the economy due to lockdowns.”
BCX results reflect the challenging environment with its revenue down 4.9% to R3.8 billion.
The IT business is hardest hit by the challenging environment with revenue down 11.8% to R1.8 billion due to delayed investment in IT by enterprise customers, Telkom said. No significant churn was observed from existing customers.
Openserve on a recovery path
Revenue of R3.3 billion was only R48 million – or 1.4% – lower than the prior year, Telkom said. This small decline indicates a recovery in Openserve’s revenue, following the four previous successive years of a significant decline in revenue.
“This is attributable to growth in high capacity links for carriers, an increase in demand for fibre services and a slowdown in fixed voice churn, which has a much smaller proportionate impact than prior years,” it said.
“Significant strides were made in the fibre business, increasing the number of homes passed by 34.3% to 612,451 following fibre rollout and supply chain challenges from the international lockdown in the prior year,” Telkom said.
The number of homes connected with fibre increased by 32.2% to 306,837 representing a fibre connectivity rate of 50.1% which remains the highest in the market, the group said.
“We have reached an inflection point, where the number of homes connected with fibre of 306,837 surpassed the number of homes connected with copper of 264,186.
“Despite the decline in the overall fixed broadband numbers, we have seen an increase in usage with fixed broadband traffic up 4.4%. More than 60% of our broadband customer base utilise speeds exceeding 10 Mbps,” it said.