Telkom doubles subscribers as mobile unit lifts overall performance

7th June 2019

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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Telecommunications group Telkom’s mobile division elevated its overall operating revenue, headline earnings and earnings before interest, taxes, depreciation and amortisation (Ebitda) for the financial year ended March 31.

The group posted a 22.6% surge in headline earnings a share to 722c and a 5.3% hike in group operating revenue to R41.8-billion for the year under review.

Ebitda was up 8.5% to R11.3-billion, owing to ongoing sustainable cost management, while the Ebitda margin expanded by 0.8 of a percentage point to 27.1% during the year.

“Telkom’s performance for the year ended March 31, 2019, driven by the mobile business, saw mobile services revenue increase by 58.3%, underpinned by the group’s broadband-led proposition,” says Telkom Group CEO Sipho Maseko.

The continued growth in mobile is now beginning to achieve scale.

“The deterioration of our copper base technology is being more than offset by a strong double-digit growth in the mobile business, resulting in a positive revenue growth of 16.4% at the consumer level,” he adds.

The increase was supported by 85.9% growth in active subscribers to 9.7-million and, despite adding 4.5-million subscribers in the year, Telkom’s blended average revenue per user-(Arpu) remains stable at R100.

Prepaid subscribers more than doubled, compared with the prior year, increasing by 109.3% to 7.8-million, while prepaid Arpu increased 19.8% to R71.

Postpaid subscribers increased by 26.8% to 1.9-million, with an Arpu of R186.

“Our broadband-led strategy is yielding positive results. Data revenue increased by 34.7% to R8.9-billion, mainly owing to mobile data revenue growth of 60.7% to R5.9-billion. Our broadband customer base, which includes the asymmetric digital subscriber line, the very high-speed digital subscriber line, long-term evolution (LTE) and fibre, increased by 8.4% to 1.7-million customers,” Maseko notes.

“Over the past six years, the contribution of our new revenue streams has grown significantly; the mobile revenue contribution increased from 3.2% to 25.7%, and information technology (IT) revenue grew from 0.9% to 16.2%,” he adds.

In line with global trends, Telkom’s fixed business remains under pressure; however, the JSE-listed group continues to invest in the fibre ecosystem, which sustains its fixed data revenue.

“We are prudent in our homes-passed-by-fibre strategy and focus on homes connected,” he explains, noting that Telkom’s home connectivity rate increased to 38.4% in 2019, up from 30.7% in 2018.

The fixed business continues to be negatively impacted on by a change in technology, with fixed voice and interconnection revenue declining 14.3%, as customers migrate to newer technologies.

Ongoing investment is enabling Telkom to grow new revenue in evolving technology, offsetting the traditional revenue shrinkage.

“Our investment in the national fibre portfolio increased our footprint by 6 400 km of fibre, with a total fibre network of 163 800 km. This grew Ethernet services on the network by 13 400 connections to 37 400. The associated capital investment reduced by 7.4%,” he says.

“Telkom’s capital investment of R7.7-billion – with a capital expenditure-to-revenue ratio of 18.4% – continues to underpin business growth.”

During the year under review, BCX recorded a 6.2% growth in IT revenue from external enterprise customers, despite the weak economic environment.

Gyro’s external revenue expanded 24.2% and the mast and tower tenants grew by 10.5% in 2019.

During the year under review, Telkom Consumer continued its fourth-generation- (4G-) driven network expansion programme to support growing customer numbers and data traffic.

“We increased capital investment by 30.1% to R3-billion, increasing base stations by 28.7% to 5 116 base stations – 3 438 of those base stations are 4G, an increase of 47.4%, compared with the prior year.”

Telkom also started refarming a portion of its 2 100 MHz spectrum to LTE, following the successful refarming of the 1 800 MHz spectrum for smartphones.

“The strategic intent of focusing spectrum resources towards 4G contributed to smartphone subscribers increasing by 91.8% to 5.3-million,” Maseko concludes.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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