The number of Telkom fixed lines in service has fallen by almost 5% in the past 12 months, dropping to just 3,5m, from 3,7m a year ago, the telecommunications operator said on Monday.
At the same time, however, Telkom has recorded a 7,4% increase in the number of broadband digital subscriber lines to 965 000, meaning the percentage of the company’s lines that are being used for DSL services has climbed from 24,3% to 27,3% in the past 12 months.
“We still face significant challenges in our fixed-line voice revenue as fixed-to-mobile substitution continues. Fixed-line data revenue continues to be impacted by lower pricing driven by competition,” Telkom said.
Group operating revenue decreased by 0,5% to R15,9bn, driven lower by the “continuous decline in fixed-line voice revenue and lower data leased-line revenue resulting from self-provisioning by other licensed operators, partly offset by higher mobile revenue”.
Fixed-line voice usage revenue fell by a sharp 12% to R3,6bn due to a 6,1% decline in voice minutes, resulting from fixed-to-mobile substitution, and a 4,9% decline in the number of lines. The decrease was predominantly in residential lines, but business lines also decreased due to the consolidation of business activities and cost-saving initiatives, Telkom said.
Fixed-line subscriptions revenue grew 0,7% to R3,9bn following line rental tariff increases of about 6% during the past year.
For its mobile business, the picture is looking rosier. The number of active mobile subscribers rose by 26,7% to reach 2m by the end of September.
The mobile unit’s Ebidta loss decreased by 50,7% due to higher service and subscriptions revenue (excluding equipment sales) that was 48% up. Mobile data revenue rose by 39,3%.
Mobile voice and subscriber revenue increased by 54,7% to R348m (from R225m) thanks to a 26,7% increase in the number of active mobile subscribers and a 22,4% increase in the average revenue per user.
Capital expenditure on mobile decreased by a massive 79,9% to R164m (R815m before) due to the shift to a more concentrated roll-out in major metropolitan areas. “The current focus on the radio access network is to complete existing projects and to provide capacity to relieve congestion in identified growth areas.”
The group recorded a profit after tax of R1,2bn for the six-month period, down from R3bn in 2013, though the year-ago figure was influenced by a one-off R2,2bn net gain recognised on the curtailment of its post-retirement medical aid liability and retrenchment, voluntary early retirement and severance package costs of R325m for 406 employees in the 2014 interim reporting period.
On a normalised basis, Telkom reported a profit after tax of R1,4bn from R791m in the same period last year. Earnings before interest, tax, depreciation and amortisation was R4,4bn (from R3,9bn), resulting in a 14,9% increase in headline earnings per share.
“The increase was driven by the benefit from lower payments to mobile operators and lower employee expenses due to lower service and interest cost as a result of the lower post-retirement medical aid liability, which was curtailed in the prior period, as well as lower full-time and part-time staff headcount,” Telkom said.
Group capital expenditure was also given the bullet, decreasing by 42,8% to R1,8bn (from R3,2bn), representing 11,4% of group operating revenue from 19,8% a year ago.
CEO Sipho Maseko said the operating environment has remained “challenging”, with the telecoms industry “very competitive”. As a result, he said, Telkom is under pressure, particularly in the enterprise (business) segment.
“Fixed-line revenues also remain under severe pressure and leased-line revenues continue to decline,” Maseko said.
“Our customers are also feeling the effect of the adverse economic environment and are adjusting usage and purchasing patterns. Telkom’s good reputation and relationships have served us well in retaining key customers. However, discounts are deeper owing to competitive pressure.” — © 2014 NewsCentral Media