As JSE-listed Telkom delivers muted half-year financial results, the group plans to continue seeking a sustainable growth framework, reviewing its business portfolio and prioritising strategic initiatives.
This includes a review of the telecommunications giant’s legacy network and information technology systems, noncore assets and product portfolio.
Telkom’s shares on the Johannesburg bourse fell nearly 6% on Friday after increased competition and a tough economic environment dragged the financial performance of the company for the six months to September 30.
Its interim operating revenue declined by 0.6% to R20.1-billion, while net revenue was down 0.9% to R15.7-billion and earnings before interest, taxes, depreciation and amortisation contracted by 1.9% to R5.2-billion.
Headline earnings a share decreased by 7.4% to 303.9c.
BCX took the biggest hit during the period under review, while the group’s fibre and mobile subsidiaries delivered strong performances during the first half of the year.
“It is imperative for the group to continue to invest [diligently, and sustainably,] in key growth areas to ensure that we do not compromise our medium-term prospects. This is the primary reason for the increased investment in fibre and mobile,” Telkom group CEO Sipho Maseko said on Friday.
BCX had been negatively impacted on by the trading environment during the interim period, with corporates deferring information and communication technology investment and the public sector lowering its spend.
“BCX will continue with its cost-conscious approach in order to preserve profit and margins. Our business portfolio review process will positively change the quality of our earnings and revenue mix,” Maseko said.
BCX initiated a review during the half-year to identify core and noncore assets and the classification of certain BCX investments in associates and joint ventures held for sale.
The group also aimed to complete the full extraction of synergies between Telkom Business and BCX, which were merged following Telkom’s acquisition of the latter.
Meanwhile, Openserve is reviewing its own network technology, while optimising its network footprint, analysing the current deployed network and upgrading, decommissioning and using alternative technologies to modernise, transform and commercialise the network.
Simultaneously, Telkom Consumer will embark on a product rationalisation process to discontinue legacy products, with the range of Unlimited, Freeme and Smart broadband products forming the bedrock of its sales and marketing advances in future.
Further, the company is redesigning its information technology systems to drive and enable a lean business operating model and provide an automated business process.
“We continue to drive the new operating model that provides greater business unit accountability for operational delivery and value contribution for the group as a whole, while ensuring strategic control from the corporate centre,” Maseko stated.