8ta to break even in 2015?

 ·8 Jun 2012

Telkom chief financial officer Jacques Schindehutte, says that the group hopes its mobile arm 8ta, will break even within five years of its launch. 8ta was launched in October 2010.

In reporting its results in 2011, Telkom pushed out its guidance with regard to break-even EBITDA for 8ta, to the financial year ending March 2014 as a result of its delayed launch and network and systems build-out.

Schindehutte said he has changed his communication regarding 8ta’s break even point. “I don’t like to talk about a break even point in a particular year anymore. In a business like this, start-ups take about five to seven years to break even. We obviously believe that ours will be at the shorter end of the stick,” he said. Schindehutte is currently acting head of 8ta until a permanent boss is appointed.

He also admitted that the mobile arm remains a risk over the short term amid fierce competition in the mobile space in South Africa.

Telkom said in a statement on Friday (8 June), that its commitment to its mobile strategy remains steadfast. “While the tactics for achieving our mobile goals may change from time to time, we are committed to the strategy as a whole and believe that mobile is an integral part of ensuring that Telkom grows into the future. We will focus on data to capitalise on the smartphone revolution, develop a high value customer focus to improve ARPU, loyalty and retention and drive fixed mobile convergence trough leveraging off a fully IP enabled, next generation fixed-line network,” the group said.

Telkom CEO Nombulelo “Pinky” Moholi noted that 8ta had completed construction of 1,782 base stations of which 1,351 are on air. There have been challenges in terms of finding adequate power on certain of the remaining base stations, the telco boss said, adding that the group would aim to construct an additional 1,000 towers in the coming financial year.

8ta achieved revenue of R1.200 billion and an EBITDA loss before inter-segmental eliminations of R2.425 billion for the year ended 31 March 2012.

Total revenue generating subscribers equalled 1,483,401 with pre-paid contributing 1,039,448 and post-paid 443,953. Pre-paid ARPU was R20.89 and post-paid ARPU R206.83. Blended ARPU was R68.86.

“In the 2013 financial year we aim to reduce our EBITDA losses in mobile by approximately 20% and plan to invest between R2 billion and R2.5 billion in capital expenditure,” Telkom said.

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