Telkom said it delivered a solid revenue performance in the six months ended September 2019, with revenue increasing 4.7% to R21.5 billion despite the challenging operating environment.<\/p>\n
The telco said that its mobile business was behind the solid interim revenue growth.<\/p>\n
Key salient features:<\/p>\n
\u201cProfitability was affected by deep investments in future growth, particularly in the mobile business \u2013 which is building critical mass and continues to gain market share as consumers search for value,\u201d said Telkom Group chief executive Sipho Maseko.<\/p>\n
\u201cWith consumers under immense pressure as the economy struggles to gain traction, this was an important period for the group. We have made progress on our strategy and laid the foundation for growth, particularly as the economy starts to turn, and if government licences spectrum in a way that stimulates competition,\u201d Maseko said.<\/p>\n
Mobile service revenue was the main driver of revenue growth, increasing 56.6% to R5.6 billion as subscriber numbers surged 75.5% to 11.5 million.<\/p>\n
“Our mobile business remains the fastest growing business in the country, with market-share gains underpinned by the company\u2019s affordable broadband-led propositions,” the chief executive said.<\/p>\n
Group profitability was affected by capital investments, higher hedging costs, higher finance charges and fair value movements linked to foreign exchange adjustments.<\/p>\n
Capital investments totalled R4.3 billion in the period \u2013 representing 19.7% of revenue.<\/p>\n
More than half of the capital invested was in the mobile business, where capital expenditure rose 66% to R2.2 billion to support that division\u2019s growth. The group also invested in accelerating the migration of customers to LTE and fibre, it said.<\/p>\n
\u201cOngoing investments in new revenue streams continue to drive the overall growth of the group, although our deliberate strategy to accelerate the migration to new technologies has affected profitability in the short term,\u201d Maseko said.<\/p>\n
The strategy to migrate customers to next-generation technologies contributed to a 19.1% decline in fixed voice and interconnection revenues across the group.<\/p>\n
Despite this, Openserve\u2019s and BCX\u2019s overall revenue declines in these businesses were contained at 8.5% and 3.3% percent respectively, thanks to growth in new revenue streams, Telkom said.<\/p>\n
In the period, Telkom said its mobile business increased coverage by growing its portfolio of mobile base stations by 24.9% to 5,476, and by implementing the new roaming agreement to supplement the business\u2019 own network.<\/p>\n
At the same time, over 300,000 customers have been migrated from copper-based services to fibre and LTE over the past 18 months.<\/p>\n
“Meanwhile, the group\u2019s strategy to separate the real estate property portfolio to increase management focus is yielding good results. The Gyro business contributed positively to the group through an 11.8% increase in masts and towers revenue,” Telkom said.<\/p>\n
\u201cThe operating environment remains challenging, but the imminent licensing of new spectrum, coupled with macroeconomic reforms and the investments we continue to make in our own business, means we are optimistic about the years ahead,\u201d said Maseko.<\/p>\n
\u201cWe have shown our commitment to South Africa by investing into the economy at a time when the country needs it most. We are confident that these investments will pay off.\u201d<\/p>\n