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Telkom’s mobile business is on fire

Mobile data revenue surges 54% in the first half of 2021 financial year.
Image: Waldo Swiegers, Bloomberg

Telkom on Tuesday said its mobile data revenue surged 54% in the first half of its 2021 financial year, supported by an 81% surge in mobile traffic.

However, it’s fixed-line business contracted sharply, losing more than half a million customers since the end of March as consumers ditched landlines for mobile services and as Telkom itself aggressively cut off expensive-to-maintain legacy copper connections in favour of fibre and fixed-4G/LTE alternatives.

Mobile customers climbed 19% to 13.7 million with net additions of 2.2 million subscribers, making Telkom the fast-growing large mobile operator in South Africa and placing it ahead of traditional third-placed industry player Cell C.

Telkom Mobile expanded margin by 13.2 percentage points to 29.9%, optimised direct its cost-to-revenue ratio from 53% in the prior period to 38%, and more than doubled its earnings before interest, tax, depreciation and amortisation to R2.9-billion.

Telkom attributed the strong growth in mobile traffic to the Covid-19 lockdown and associated work-from-home measures as well as online schooling.

Group operational performance was strong, with Ebitda climbing 6.3% to R5.9-billion, delivering a margin of 27.6%. Headline earnings per share spiked by 25.4%. However, network investment also fell during the period, with capital expenditure down almost a third to R2.9-billion.

Free cash flow

Adjusted free cash flow improved by R2.6-billion to R1.3-billion, compared to a negative R1.3-billion in the prior year. Revenue, however, fell by 0.4% to R21.4-billion.

“Telkom Mobile has performed exceptionally well, despite the negative impact of the national lockdown on parts of our business,” said CEO Sipho Maseko in a statement.

The BCX business did not fare nearly as well due to a decline in enterprise fixed-voice revenues. Enterprise customers reduced IT spend in the first half of the year and postponed some of their capital investment projects as a response to the heightened uncertainty caused by Covid-19. This resulted in BCX’s IT business revenue declining by 8.6%.

The decrease in fixed-voice volumes also impacted wholesale division Openserve negatively with revenue there declining by 13.6%, a shift driven by a 22.7% contraction in fixed voice revenue. However, Openserve grew the fibre attachment rate (the percentage of consumers who took up its home fibre services where these were available) to 53.8%.

The group had a cash balance of R3.9-billion at the end of September. It strengthened the balance sheet by repaying maturing debt of R900-million. Net debt to Ebitda improved from 1.3x at the full year to 1x now.  — © 2020 NewsCentral Media

Duncan McLeod is Editor of TechCentral. 

This article was first published on TechCentral, here.

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As long as the share price heats up – I cannot wait to get out.

MTN may be a better buy. Currently strong.

MTN is in the fintech arena.

They are competing with the banks and have a better coverage of customers…. imagine pushing a financial product to a 200+ million subscriber base … much easier than a BANK.

All good and well but from my personal experience, try visiting a Telkom “service” centre. It’s an experience that is on par with Home Affairs except it’s clean.

I could not wait to quit dealing with Telkom after a 2 year struggle to get billing issues sorted. I paid to leave.

Ok so MW deleted my last post

In any event, i agree with you and we all know why service in this country is sub standard!

Enough said!

I know a farm where three generations have paid the service for nearly 60 years. Then Telkom just walked away and left them with no alternative. So much for loyalty to customers. Another semi SOE that is most welcome to join SAA and Denel riding off into the sunset.

End of comments.

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