Despite reporting a further 6,5% decline in the number of fixed lines in service to just 3,2m, Telkom has declared that it has completed a three-year turnaround strategy and is now ready for growth.
This comes as it reports a 15,5% increase in normalised headline earnings per share to R6,58 on the back of a 4% increase in net revenue to R28bn and a 14% increase in operating revenue to R37bn for the year ended 31 March 2016. It announced, too, that it is hiking its dividend by 10% to R2,70/share.
Normalised profit after tax reached R4bn, compared to R3bn for the previous period.
The mobile business is a highlight of the financial results for the 2016 financial year, with the Ebitda loss from mobile reduced from more than R2bn three years ago to R43m now. (Ebitda, or earnings before interest, tax, depreciation and amortisation, is a measure of operation profit.)
Since the fourth quarter (January to March 2016), the mobile business has been breaking even on a monthly basis,” Telkom said.
Operating revenue growth was boosted by the inclusion of IT acquisition Business Connexion and a “solid performance” from data services.
The good performance was partially offset by a 2% decline in voice and subscriptions revenue as voice usage continued its downward trend and customers continued to substitute mobile services for fixed lines.
The number of fixed lines in service has fallen to its lowest level in more than two decades.
“Telkom responded to this trend by migrating customers from legacy services such as fixed-line voice to bundled, converged and next-generation data products where demand is strongest,” it said.
Capital outlay increased by 17% to R6bn as the group invested in key priority areas, which include fibre, LTE and mobile, IT systems, maintenance and rehabilitation, and “service on demand”.
“In the year ahead, an aggressive fibre roll-out is our number one priority, while simultaneously deploying our other capital resources as we focus on revenue generation and cost efficiency to grow earnings,” said Telkom CEO Sipho Maseko.
“Having completed the turnaround phase of our strategy, we are embarking on the next phase, where our bias is to growth as we focus on implementing our new operating model.” — (c) 2016 NewsCentral Media
