Telkom has grown its mobile subscriber base by a stunning 50% in the past year as its aggressively priced, data-led FreeMe plans gain traction among consumers.

Reporting its results for the six months to 30 September 2018, Telkom said it now has 6.5 million mobile customers, helping buoy its service revenue despite downward pressure on its traditional businesses and on its ICT services company BCX.

“The accelerated performance (in mobile) continues to be underpinned by increased capital expenditure, increased store footprint and our popular data-led and broadband product positions,” Telkom said in a statement.

Mobile service revenue grew by 53.8%, pushing group operating revenue to R20.8-million.

Reported headline earnings per share (Heps) decreased by 3.3% to R2.88, impacted by voluntary severance and early retirement package costs of R288-million and a related tax impact of R80-million.

Adjusted Heps, excluding the impact of these costs, increased 10.3% to R3.29.

Capital expenditure was R3.3-billion, down 17.6%. “Mobile and fibre remain capex focus areas with impressive returns in mobile service revenues.”

Cash flow

Free cash flow recovered from negative R963-million in the prior year to positive R179-million. The improvement was mainly due to an 18.9% decrease in cash paid for capital expenditure and a 13% increase in cash generated from operations before dividend paid.

Revenue at Openserve, Telkom’s wholesale arm, increased 0.9% to R8.7-billion. Fibre-to-the-business connections grew by 59.5%.

BCX was again negatively affected by the weak economy, with revenue declining 4.3% to R10.2-billion.