Resurgent Telkom eyes dividend return
Telkom on Friday (13 June) reported a marginal rise (1.1%) in group operating revenue for the year ended March 2014, to R32.483 billion.
This, it said, was driven by higher mobile handset and equipment sales, growth in mobile data and IT Business services data revenue.
Telkom said it may return to dividend payouts in 2015, having last delivered a dividend in 2011.
The group said its results were offset by a decline in voice revenue; however, total revenue improved to R33 billion, from R32.85 billion before.
The group also swung back into an operating profit of R4.6 billion, from a prior loss of R11.15 billion in 2013.
Headline earnings per share, excluding the once off items, increased 35.1% to 388 cents, Telkom said.
EBITDA excluding the once off items improved 3.8% to R8.4 billion.
Fixed-line voice and interconnection revenue decreased 7.4% to R9.4 billion, and fixed-line data revenue decreased 1.1% to R10.3 billion
Mobile revenue, however, increased 72.7% to R2.35 billion, lifted by mobile data revenue, up 80.2% to R656 million.
Active mobile subscribers increased 17.6% to 1.8 million with a blended ARPU
of R62.79 – while the group said it integrated 1,183 LTE sites during the reporting period.
“Our capital expenditure programme is aligned to our strategy to build our
Next Generation Network and grow mobile and converged service offerings,” said Telkom Group CEO Sipho Maseko.
Sipho Maseko
Group capital expenditure, which includes spend on intangible assets, increased 12% to R6.458 billion (2013: R5.768 million) and representing 19.9% of group operating revenue.
“Our efforts to turn Telkom around are starting to produce results,” Maseko said. “In the past financial year, in line with our guidance to stabilise revenues, we have achieved revenue growth of 1.1% for the year, confirming that we still face significant challenges largely as a result of the sustained pressure on our fixed-line revenues.”
He noted that operating expenses, excluding depreciation, decreased 2.1% to R18.2
billion, from R18.5 billion in 2013: “a commendable achievement when you
consider that in real terms this translates to an 8.2% reduction in operating expenses,” he said.
“This can be attributed to lower employee cost, lower bad debts as we improved our credit vetting processes and efficiencies gained on various cost management initiatives including a reduction in marketing expenditure and lower inventory write-offs,” the CEO said.
Looking ahead, Maseko said that, based on group guidance provided in November 2013, Telkom plans to reinstate the dividend in the 2015 financial year, subject to the
financial performance, the operating environment, growth opportunities and debt and cash flow levels.
The board has decided not to declare a dividend in respect of the financial year ended March 2014.
“Going forward, we expect to see continued pressure on fixed-line voice revenues, intensified by strong competition, a challenging macro-economic environment and effects of regulatory interventions.”
“Our objective to further stabilise and grow revenue is dependent on effectively positioning our resources to drive value and achieving efficiencies across our operating cost base to improve EBITDA margins,” Maseko said.
Telkom said it aims to successfully conclude the proposed MTN South Africa and Business Connexion transactions within the current financial year.
In May, Telkom said it has entered into an agreement to acquire listed ICT group, BCX, in a R2.7 billion cash offer funded from its own cash resources.
MTN signed an agreement with Telkom in March 2014, which would see it take over financial and operational responsibility for the rollout and operation of Telkom’s radio access network (RAN).
The two companies entered into a Heads of Agreement (HoA) to enable each party to be able to roam on either party’s network.
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