Telecommunications group Telkom has posted increases of 0.9% and 8.5% respectively in revenue and earnings before interest, taxes, depreciation and amortisation (Ebitda) during the nine months to December 31, 2020.

Telkom Group CEO Sipho Maseko attributed the results to robust mobile growth, the service revenue of which expanded 40.7% during the nine months under review, as well as solid sustainable cost management and strong free cash flow generation.

The group’s overall Ebitda increased 8.5% to R8.64-billion, with the margin expanding from 24.8% in the corresponding period last year to 26.6%, mostly driven by the benefit of the Phase 1 restructuring programme which realised R710-million during the nine months to December.

The company completed Phase 1 of the restructuring programme and started the second phase with BCX during the third quarter of the year, with costs of R200-million incurred.

Excluding the impact of the restructuring cost, the year-to-date Ebitda increased 10.9% to R8.83-billion when compared with the prior corresponding period.

“Overall operating expenditure costs (opex) continue to decline compared with the previous year, exceeding management’s target of containing opex growth below inflation,” said Maseko.

Group revenue edged up 0.9% year on year to R32.43-billion, with a 26.2% decline in fixed voice and interconnection revenue offset by strong growth in the mobile service revenue.

Within the consumer business, mobile service revenue increased 40.7% to R12.58-billion during the nine months under review, compared with R8.94-billion reported in the preceding period.

This was supported by 25.9% growth in active subscribers to 14.9-million and 23.9% increase in blended average revenue per user to R108.

During the nine months to December, mobile data revenue grew by 46.2% to R9.05-billion, while mobile traffic expanded 64.4% and mobile broadband customers increased 27% to more than 10-million.

“This was enabled by a 9.7% increase in network roll-out to 6 135 sites,” he explained.

Mobile Ebitda during the period increased 105.8% to R4.12-billion, with an Ebitda margin of 27.7%.

However, BCX and Openserve remain under pressure.

BCX’s revenue decreased 9% to R11.85-billion, while Openserve recorded a 12% decrease in revenue to R10.23-billion, as fixed voice use continues to decline. Revenue from Gyro masts and towers increased 6.2% to R931-million.

Meanwhile, capital expenditure of R5.12-billion was invested into growth areas such as the mobile business and fibre during the nine months to December.

Telkom reported that its liquidity remains healthy with a stable balance sheet, with free cash flow of R1.57-billion, an improvement from the R211-million reported in the first half of the year.

Excluding the one-off payment of voluntary severance packages and voluntary early retirement packages of R1.25-billion during the period, Telkom generated free cash flow of R2.82-billion.