Telkom slashes load shedding bill by 85%

Telkom has seen a slight jump in revenue amid better internal and external energy supply for the company.

“Telkom had a good start to the financial year with a pleasing performance on the top line benefiting from our data-led strategy and compelling value propositions,” said Group CEO Serame Taukobong in a trading update for the quarter ending 30 June 2024 (Q1 2024).

“Our next-generation revenue (NGN) streams continued their positive momentum and grew by R576 million, an increase of 7.0%. NGN revenues now comprise 80.7% of Group revenue.”

Group revenue grew within guidance by 3.9% to R10.9 billion, driven by demand for its NGN offerings.

Key contributors to strong NGN growth included Mobile service revenue growth of 9.5%, fixed data NGN revenue growth of 7.1% and information technology revenue growth of 10.3%.

The group also saw continued momentum in demand for data traffic and mobile, with fixed traffic growing 25.9% and 33.0%, respectively.

Mobile subscribers advanced by 14.6% and surpassed the 21 million mark.

Home connected with fibre grew by strong double digits, at 19.5%.

“These key performance drivers propelled NGN revenue growth, supported by reduced direct costs
resulting from ongoing cost optimisation projects,” said Telkom.

“This led to EBITDA growth of 24.1%, advancing EBITDA to R2,778 million with the Group EBITDA margin improving to 25.5%, also benefiting from a stabilised electricity supply in South Africa during the quarter.”

In addition to its network consolidation and implications strategy, Openserve was committed to executing an improved green energy mix through the deployment of lithium-ion batteries and solar energy products alongside an improved diesel delivery model.

These initiatives, alongside upgrades of technologies and infrastructure at office locations, improved the stability of the electricity grid, resulting in a decrease of 84.6% (R128 million) in diesel spending to R23 million over the quarter.

The group’s key financials over the quarter are as follows:

• Group revenue up 3.9% to R10 907 million
• Group next generation (“NGN”) revenue up 7.0%
• Group EBITDA up 24.1% to R2 778 million*
• Telkom Consumer performance was driven by growth in value-compelling data offering
  • Mobile revenue up 5.3% to R5 737 million
    • Mobile service revenue up 9.5%
    • Mobile data revenue up 12.9%
  • Mobile EBITDA up 35.7% to R1 543 million
• Openserve fixed data NGN revenue up 7.1%
  • EBITDA up 16.8% to R1 023 million
  • Fibre-to-the-home (FTTH) connectivity rate of 49%
• BCX revenue up 2.4% to R3 175 million
  • IT revenue up 7.1%
• Swiftnet revenue up 5.2%
• R161 million proceeds from non-core property disposals

Outlook

The group received shareholder approval to sell its masts and towers business, which is housed in Swiftnet, to a consortium managed by Actis LLP for R6.75 billion in May.

The Competition Commission recommends that the transaction be approved, and regulatory approvals are needed from the Competition Tribunal and the Independent Communications Authority of South Africa (ICASA).

The group also raised funds by means of a public bond action in the debt capital markets and issued two bond instruments with 3-year and 5-year tenors, raising R345 million and R405 million, respectively.

The R750 million is set to refinance maturing debt and address upcoming maturities in FY2025.

However, the group is still not out of the woods in its legal fight with the Presidency and the Special Investigating Unit.

In July 2023, the Pretoria High Court handed down a judgement setting aside a Presidential Proclamation, which gave the SIU authority to investigate various historical matters, including Telkom’s contracting for network and advisory services and the disposal of former Telkom subsidiaries.

The matter is currently pending before the Supreme Court of Appeal.

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