Telkom revenue declines amid buyout talks

Telkom said in trading update for the quarter ended June 2022 that group revenue declined 3.2% to R10.28 billion despite continued growth in its mobile division and strong fibre numbers.

Group revenue was impacted by accelerated migration from legacy, tough operating environment and intensely competitive landscape.

“We accelerated migration from legacy to next-generation technologies, following a slowdown over the past two years as we catered for customer demands in the intense Covid-19 environment,” said chief executive officer, Serame Taukobong.

This resulted in fixed legacy voice revenue declining by 19.9% year on year, mainly seen across the enterprise and small to medium business segment. This was partially offset by an increase in external revenue of BCX IT business and Openserve by 4.8% and 8.4%, respectively.

Group EBITDA declined by 15.2% impacted by topline performance and an increase in the group’s cost base, the chief executive said.

Active mobile subscribers climbed 7.8% year on year to 17.3 million with a blended ARPU of R88.53, while mobile data traffic was up 12.4% to 263 petabytes supported by 2% growth in broadband subscribers to 10.7 million using on average 9.1 GB per month and at a 13.5% increase in consumption.

  • Post-paid subscribers grew 8.0% year on year to 2.8 million at an ARPU of R208.50
  • Pre-paid subscribers grew 7.7% year on year to 14.5 million at an ARPU of R64.77

Total mobile revenue, however, declined by 2% to R5.238 billion, “due to the continued provision of value- compelling propositions and driving data consumption, as a result of consumers continuing to be under severe economic pressure, which include but are not limited to fuel price increases, interest rate adjustments and the suspension of the Covid-19 social relief of distress grants for two months”.

Telkom said it sustained its fibre growth trajectory in the period under review on a year-on-year basis. Total fixed traffic increased by 18.9% to 452 petabytes. The number of homes passed with fibre grew 45.3% to more than 890,000. The number of homes connected with fibre grew by 35.2% to 414,847 representing FTTH connectivity rate of 46.6%.

Openserve expects this trend to continue underpinned by the ongoing demand for data consumption which is reflected through the 18.9% growth in fixed data traffic to 452 petabytes.

“While Openserve lays the building blocks for future growth, the ongoing economic pressures and the serious challenge of load shedding negatively impacted its costs with a significant increase of R44 million in diesel spend, resulting in an EBITDA margin of 29.9% in the first quarter of the year.

“Despite these challenges, Openserve continues to focus on transforming its fixed costs whilst executing on its strategic objectives,” Telkom said.

Telkom said that its capex investment reduced by 35.2% year on year as it leveraged off the front-loaded capex already incurred in the prior two years, as a result of the temporary spectrum. “Our spend to date of R346 million enabled improved capacity and coverage with 7,350 integrated base stations, representing a 10.6% year-on-year increase in base stations,” it said.

BCX revenue declined 3.7% to R3.4 billion in the first quarter. “The easing of global supply chain constraints and deal pipeline improvement signals a positive outlook for the year ahead,” Telkom said.

Mobile operator MTN is currently in talks to buy Telkom in a deal that would make the combined company the biggest South African mobile-phone operator by number of subscribers, Bloomberg reported.

On Monday MTN said it expects to report a big jump in half-year earnings ended June 2022.


Read: MTN surges on strong earnings

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Telkom revenue declines amid buyout talks