Mobile lifts Telkom, but fixed voice slumps - TechCentral

Mobile lifts Telkom, but fixed voice slumps

Sipho Maseko

Sipho Maseko

Excluding the impact of retrenchments, Telkom has reported a 13,9% improvement in headline earnings per share, handily outstripping muted net revenue growth of 1,2% in the six months ended 30 September 2015.

Earnings before interest, tax, depreciation and amortisation — a measure of operating profit — improved by 15,1% to R5bn before the once-off costs related to the voluntary early retirement and severance packages. Operating expenses, excluding depreciation, decreased by 2,3% to R9bn.

The strongest performance came from Telkom’s mobile business, where services and subscription revenue grew by 40,5% to R1,2bn and data revenue leapt by 68,5% to R711m. Active mobile subscribers increased by 11,5% to 2,3m, generating average revenue per user of R89,05/month.

But the traditional fixed-line business remains under intense pressure. Not only has the number of fixed lines in service continued to decline, but fixed voice usage revenue has continued its downward trajectory, falling by 14,1% year on year to R3,1bn. Interconnection revenue slumped, down by 17,9%, to R598m. However, subscription revenue from fixed lines increased by 7,5%, helping keep the decline in fixed voice and subscriptions to 2,1%.

One of the worst performers was leased lines, where revenues fell by more than a quarter, although this was offset by demand for Telkom’s Megalines and Metro Ethernet products.

The number of ADSL subscribers increased by 4,2%, remaining just above the million-user line. ADSL revenue rose by 5,5%.

“During the first six months of the 2016 financial year, we continued with our efforts to transform Telkom and stabilise revenue, while at the same time addressing the fixed and inefficient nature of our operating cost base,” said CEO Sipho Maseko.

“The challenges we faced during the period included increasing competition and a soft economy. Despite these challenges, we were able to continue to stabilise our net revenue and achieve growth of 1,2% year on year.”

Capital expenditure during the six months rose by 20,4% to R2,3bn as Telkom continued expanding its mobile broadband network and accelerated the deployment of fibre to the home.

“We have intensified the funding for fibre to the home to maintain our competitive advantage and retain our existing customers,” said Maseko. However, the move to newer technologies has led to an increase in depreciation of assets to the tune of R97m.

The increase in capex, coupled with the R2,7bn all-cash purchase of IT group Business Connexion, a R1,3bn dividend payout, the repayment of a maturing bond of R1,2bn and retrenchment costs of R1,5bn, led to an increase in the group’s debt. However, Maseko said gearing, or the debt to equity ratio, remains low.

He said that intense competition, the weak economy and the fixed and inefficient nature of Telkom’s operating cost base will remain with the group for the second half of the financial year. “As a result, the ongoing transformation of our business from both a revenue and cost perspective remains our key focus.”  — © 2015 NewsCentral Media

Comments are closed.

© 2009 – 2019 NewsCentral Media