JSE-listed Telkom tells of mixed hit from Covid-19 restrictions

18th September 2020 By: Natasha Odendaal - Creamer Media Senior Deputy Editor

Covid-19 and the national lockdown have impacted JES-listed Telkom’s business to varying degrees.

In an update to the market, Telkom said that, while its consumer business benefitted from the increased demand from people working from home and online schooling, its BCX and Small Medium Business (SMB) units were negatively impacted as corporate customers came under severe financial pressure.

However, overall, the group’s revenue showed resilience during the first half 2020.

Telkom’s consumer segment performed “very well” despite the national lockdown negatively impacting the distribution channels, and the mobile business sustained its growth trajectory into the first half of the year.

“Mobile data, which contributes about 70% of the mobile business, was the main driver of growth driven by strong growth in mobile traffic. The mobile business continued to gain market share from its peers both from a customer and revenue perspective to become the third largest mobile telecom in South Africa in a period of ten years of establishment,” the company said in the statement.

The enterprise fixed business was negatively affected as use was diverted to mobile connectivity, leading to a significant decline in fixed voice revenue.

Further, during the first half of the year, enterprise customers reduced information technology spend and postponed some of their capital investment projects as a response to the heightened uncertain environment caused by Covid-19.

Openserve was well positioned to carry increased data traffic across its network owing to significant network modernisation investments, however, the subsidiary’s enterprise fixed voice volumes were negatively impacted.

Telkom continues to “relentlessly focus” on its sustainable cost management programme to protect the group’s earnings before interest, taxes, depreciation and amortisation (Ebitda) and margin.

“The benefits of the restructuring programme were realised in line with management expectations. Mobile cost to serve was optimised further impacting mobile profitability positively. Despite a significant decline in group fixed voice revenue with higher margin, group Ebitda and margin are broadly maintained,” Telkom said.

Telkom liquidity remains resilient with a stable balance sheet and no debt has been raised since March 30.

“Management remains confident with cash release initiatives target of R700-million to R1-billion for the year as it continues with its working capital optimisation.

“Management continued to be disciplined in capital allocation; capex rollout was slowed as a result of the national lockdown,” Telkom concluded.