Telkom’s 15-month window

Telkom chief technology officer, Jacques Schindehutte says it is not necessary to go to market for additional funds, despite missing out on a potential R3.3 billion windfall from a deal with Korea firm KT Corp which was blocked by government at the last hurdle.

On Friday, Telkom reported a 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) of R8.5 billion, declined 8.8% and group EBITDA margin decreased to 25.8% from 28.1%.

The group decided against a dividend declaration in respect of the financial year ended 31 March 2012.

“The important thing is for us to remain calm and focused,” Schindehutte told a press and analyst briefing in Rosebank, stressing that that Telkom was profitable, generating strong cash flows, and still had a low gearing.

“With our current resources, it is not necessary to come to market,” the financial head said lamenting that the R3 billion plus income from a deal with KT Corp “would have been nice. Without KT (Corp), there is certainly no need to panic,” Schindehutte said.

The CFO did however say that Telkom has a 15 month window period to generate cash, “or we will face significant cost interventions”.

Telkom will focus its strategy on leading in mobile data, broadband and converging its fixed and mobile offering.

The group aims to allocate 20% to 25% of its turnover to capital expenditure and will spend between R18 billion and to R21 billion.

8ta

Telkom’s mobile arm, 8ta remains a big driving force however, its breakeven point is still a long way away. It achieved revenue of R1.2 billion and an EBITDA loss before intersegmental eliminations of R2.425 billion for the year ended 31 March 2012.

Total revenue-generating subscribers equalled 1,483,401 – with prepaid contributing 1,039,448 and post-paid 443,953. Prepaid 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 R2.0 billion and R2.5 billion in capital expenditure,” Telkom said.

The group highlighted progress in its network build-out with 1,849 base stations built and 1,316 sites live by the end of May.

Looking ahead, “Our strategy going forward is to: lead in data and broadband and in Fixed Mobile Convergence; grow Telkom Business revenues by diversifying the service portfolio; regain market competitiveness in the consumer market; consolidate our position as a wholesaler of choice; and focus on profitable market segments and services,” the group said.

“Telkom faces many challenges at the moment but we will stay calm, determined
and focused on delivering on the promise of our business and strategy going forward,” said CEO Nombulelo Moholi.

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Telkom’s 15-month window