Telkom said on Tuesday that its mobile network has surpassed the 20 million user mark for the first time. Its fibre business is also doing well.

The group made the disclosures in its annual results to end-March 2024, which showed that mobile service revenue rose by 6.8% despite difficult economic conditions, and the number of homes passed with fibre jumped by 17% to top 1.2 million, with 590 000 of those connected (for a 48.5% connectivity rate, which it claims is the highest in the industry).

BCX made good strides in growing its IT service revenue, too, and Swiftnet’s tower roll-out programme and tenant growth further contributed to revenue growth and margin expansion, it said.

Group Ebitda – earnings before interest, tax, depreciation and amortisation – climbed by 5.2%, delivering a margin of 23.2%. Headline earnings per share rose by 201% to R3.76/share, helped by once-offs in the prior year that didn’t reoccur. Free cash flow more than doubled to R424-million.

Group revenue increased by 1.6% to R43.2-billion, driven by an increase in mobile data and fibre data connectivity revenue of 10.6% and 14.5%, respectively. This was partially offset by a 23.4% decrease in fixed-voice revenue due to the ongoing migration to modern technologies such as fibre and LTE, a 20.7% decrease in customer premises equipment, and a 6.8% decrease in mobile handset sales.

Capital expenditure for the year came to R6.1-billion, with the money focused on expanding the mobile network, modernising the fixed-line network and hiring staff in its IT managed services business.

Fibre demand

“This investment included spectrum, which is already deployed to further improve our offerings and service levels to retail, enterprise and wholesale customers,” it said.

Encouragingly, increased operating margins were driven by continued demand for and growth of Telkom’s next-generation network (NGN) offerings, which include fibre and LTE.

Next-generation fibre now makes up 93% of subsidiary Openserve’s external wholesale revenue. “This external growth contributed to the total NGN fibre revenue, which grew by 7.4% and now represents 76.4% of Openserve’s overall revenue of R12.5-billion.”

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Telkom Consumer “remained resilient in delivering competitive high-speed broadband solutions across both the mobile and fibre segments, increasing external revenue by 2.2% to R26.10-billion”.

“Total external revenue from mobile operations increased by 4.5% to R22.6-billion, driven by 6.8% growth in mobile service revenue. Mobile service revenue growth was primarily due to mobile data revenue, which increased by 10.6%, contributing R14.3-billion to total mobile revenue.”

Mobile remains a picture of health, with the subscriber base reaching 20.4 million, an 11.9% improvement over the 2023 financial year-end. Blended average revenue per user (Arpu) was R84 (2023: R86).

“Our prepaid base expanded by 14.3% to reach 17.5 million subscribers. This was fuelled by the acquisition of higher-quality connections and improved recharging behaviour and Arpus within the existing customer base. The post-paid base remained relatively stable at 2.9 million subscribers. Mobile broadband subscribers increased by 9.5% to 12.7 million, representing 62.3% of our total mobile base now using wireless broadband.”

During the year, Telkom spent R2.6-billion on its mobile network, which included nearly R1-billion in spectrum fees paid to communications regulator Icasa.

The pressure is still on at BCX, however, where reported revenue declined by 2.3% to R12.9-billion. Yet IT revenue increased by 9.9% to R7.3-billion, largely due to a strong performance from the hardware and software business, Telkom said.

“This performance, albeit at lower average margins, was driven by new product deals, existing software contract renewals and record cross-border sales. IT services performed well, increasing revenue by 6.6% to R4.8-billion, supported by strong growth in cybersecurity and steady growth of the data centre and infrastructure solutions business.”