Telkom performance to get worse?
Telkom CEO Nombulelo “Pinky” Moholi admits that the group’s “performance may get worse before it gets better.”
On Friday (8 June 2012), Telkom reported a marginal decline in operating revenue to R33.1 billion, for the year ended March 2012.
Headline profit for the year fell 32.8% to R1.658 billion, while profit after tax for the year declined 93% to R179 million.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) was R8.5 billion, a decline of 8.8% ,and group EBITDA margin decreased to 25.8% from 28.1%.
Telkom did not declare a dividend, saying that it would use available cash to plough back into the business.
Moholi said that management in the past had not delivered on its promises. “We made some investments we should not have made…our losses in Nigeria were embarrassing,” Moholi said of its mega loss making unit Multi-Links.
“We remain calm, we remain focussed on our strategy, and we are determined to succeed,” the company lead said highlighting a strategy of mobile and data moving ahead.
Chief financial officer of Telkom SA, Jacques Schindehutte said that people should stop thinking about mobile and fixed line in isolation, stressing that the two offerings as a combination would see Telkom stand out from its competitors.
“To think that we can compete on price and voice (mobile) is only a race we can lose,” said Schindehutte. The CFO added that Telkom could only win the race by building a business with 3G and 4G networks. “We are positioning ourselves to compete in the data world.”
“There are dark clouds on the horizon,” Schindehutte said, highlighting Competition Commission issues along with aggressive competition in the mobile space. He added that the drain from its legacy assets had accelerated in the reporting period, and would likely continue to be a burden “for some time”.
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