South Africa’s integrated communications service provider Telkom is set to release full-year results on Monday, 8 June.
The last few years have seen the company’s core fixed-line business trending lower, as growth in infrastructure and in turn increased mobile penetration by competitors have eroded fixed voice line usage in particular.
Telkom has guided that fixed-line voice usage and leased-line revenue for the full year will have been in line with trends evident in the interim results reported. In the interim period, fixed-line subscription revenue did increase by 0,7% as a result of a tariff increase, but fixed-line usage revenue declined by around 12%.
The mobile business looks to have extended a strong first half of the year into the remainder of 2015, as indicated by the company. Although a smaller contributor to group revenue, the mobile voice and subscription revenue has been increasing exponentially (+54,7% in the first half of 2015) as the average revenue per user has been growing as has the subscriber database.
Telkom’s mobile business has also benefited from the forced cut in mobile termination rates imposed on the larger industry players MTN and Vodacom.
Interim results saw operating revenue from data subdued due to a migration of services and continued competition in the current market place. The full year earnings will see investors assessing whether this division, which is a major contributor to revenue, has improved in the second half of 2015 from a lacklustre interim period.
Forward guidance from the company has indicated that basic headline earnings per share will be between 10% and 30% lower for the reporting period (vs FY2014). The decline in earnings against the prior year’s comparative period is in part due to the inclusion of provisions for retrenchment, voluntary severance and retirement packages as well as a net curtailment gain reflective in the prior year’s earnings. Normalised basic headline earnings per share, which exclude one-off items, is expected to be 20% to 40% higher.
The proposed acquisition by Telkom of 100% of Business Connexion has finally been conditionally approved by the Competition Commission. The deal should accelerate the company’s expansion into the non-core ICT services space, benefiting Telkom moving forward.
Telkom and MTN South Africa remain in discussions regarding the potential extension of their existing roaming agreement to include bilateral roaming and outsourcing of the operation of Telkom’s radio access network.
- This article was first published on Moneyweb and is republished here with permission
