The latest half-year financial results delivered by JSE-listed Telkom have been marred by a tough economic climate and increased competition that have muted overall growth across the board for the six months ended September 30.

During the first half of the year, an uncertain political, economic and policy environment had left corporate business with a depressed appetite for investment, with lower spend on information and communication technology (ICT).

Lower spend from government placed a further damper on ICT spend in the public sector, said Telkom group CEO Sipho Maseko on Friday.

Telkom posted a 7.4% decline in headline earnings a share to 303.9c for the six months to September, owing mostly to lower revenues, while basic earnings a share decreased by 7% to 316.9c.

Lower revenue also led to a 1.9% contraction in earnings before interest, taxes, depreciation and amortisation to R5.2-billion and a margin of 25.9%.

Operating revenue, impacted by weaker economic conditions, declined 0.6% to R20.1-billion.

“The negative revenue impact was higher than expected as a result of deferred corporate ICT spend, reduced spend in the public sector, as well as pricing pressures in the wholesale environment,” Maseko noted.

BCX absorbed the bulk of the impact owing to its exposure to corporate businesses and the public sector, both of which are under pressure.

The mobile business, however, continued its growth trajectory, supported by strong growth in active customers and stable average revenue per user, which had resulted in a 43.2% increase in mobile service revenue.

Meanwhile, Openserve expanded its fibre ecosystem, with improved processes and efficiencies, increasing the connectivity rate of the homes passed.

“In the first half of the year, we connected more than 40% of homes passed, while the active connectivity rate for the entire base is 24.5%,” he said.

Maseko further assured that Telkom remained cognisant of the group revenue pressure and said it would maintain diligence in sustainable investment.

However, with the strong growth in demand in mobile and fibre investments, these two areas will remain key capital expenditure (capex) focus areas.

Overall capex for the six months under review increased by 9.2% to R3.97-billion, with capex to revenue of 19.8% in line with the company’s guidance.

Telkom declared a half-year dividend of 118.1c a share.