Telkom reports 33% fall in headline profit

Telkom on Friday (8 June) 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) of R8.5 billion, declined 8.8% and group EBITDA margin decreased to 25.8% from 28.1%.

Headline earnings per share decreased 33.0% to 324.7 cents per share and basic earnings per share decreased 97.8% to 10.4 cents.

Free cash flow generated of R2.1 billion was slightly below R2.2 billion in 2011, while operating expenditure increased 6.1% to R31.250 billion.

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

“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.

“Group financial results for the year under review reflect our challenges but we took a number of significant steps towards securing a successful future for Telkom and we began
casting the foundation that will allow the group to compete well and build value in the
future,” she said.

Voice revenues declined 6.5% to R12.835 billion as a result of lower minutes of use due to mobile substitution and, to a lesser extent, lower tariffs.

Total data revenue decreased 1.7% to R10.517 billion as a result of income generated from the Soccer World Cup included in the previous year. Excluding the revenue relating to the 2010 Soccer World Cup, data revenue increased 1.6%.

ADSL subscribers increased 10.0% to 827,091 when compared to the previous year.

Group capital expenditure which includes spend on intangible assets, increased 5.3% to R4.783 billion (2011: R4.541 billion) and represents 14.5% of group revenue (2011: 13.6%).

8ta

8ta 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.

Telkom noted that its results for the year include a R896 million loss relating to the disposal of Multi-Links and an impairment loss of R569 million relating to the iWayAfrica goodwill and assets.

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.

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Telkom reports 33% fall in headline profit