Telkom’s mobile business drove another quarter of top-line growth, but the numbers behind its market-leading prepaid performance show how much of that growth now rests on airtime lending and AI-driven customer offers.
In its trading update for the first quarter ended 30 June 2026 (Q1 FY2027), the group said prepaid service revenue climbed 9.1% to R3.97-billion, the single biggest driver of a 6.4% rise in mobile service revenue. Group revenue rose 2.6% to R11.1-billion, lifted by an 8.8% increase in data revenue to R6.92-billion, which now contributes 62.4% of the total, up from 58.8% a year earlier.
Telkom credited the prepaid surge to targeted customer acquisition and “people-led AI” delivered through its customer value management platforms, Mo’Nice and Mo’Town, which it said accounted for 54.6% of prepaid service revenue in the quarter.
These platforms typically use personalised offers and targeted discounting to lift recharge frequency. At the same time, the group’s airtime-advance offering — short-term credit extended against future recharges — made up 24.7% of prepaid recharges and had 4.4 million active users.
Put another way, close to a quarter of Telkom’s prepaid recharges are now funded on credit, and more than half of prepaid revenue is generated through its personalisation platforms — a reliance that raises questions about how durable the operator’s prepaid momentum will prove.
The wider growth was solid. Mobile data revenue rose 11.4%, helped by a 19.6% jump in data traffic to 574 petabytes. Group Ebitda grew 10% to R3.08-billion and the Ebitda margin expanded 1.8 percentage points to 27.7%, aided by a 1.9% cut in total expenses. Group CEO Serame Taukobong said mobile service revenue had re-accelerated on the preceding quarter, with the group’s OneTelkom approach and cost discipline underpinning the margin gains.
Subscribers slip
Beneath the year-on-year gains, Telkom’s mobile subscriber base shrank over the quarter. The group ended June with 25.3 million active mobile subscribers, up 6.1% year on year but about 372 000 fewer than the 25.65 million reported at the end of March. Prepaid subscribers, at 22.3 million, were down roughly 326 000 on the prior quarter despite 7.1% annual growth, while the post-paid base of three million edged lower on both a quarterly and annual basis.
Data subscribers were the bright spot, rising 15.5% to 19.8 million and now making up 78.4% of the mobile base.
Read: Fat bonuses at Telkom despite group missing own targets
Average revenue per user (Arpu) pointed to volume outrunning value. Blended Arpu slipped to R74.87 from R75.40 a year earlier and post-paid Arpu fell to R182.51 from R187.13, while prepaid Arpu was broadly stable at about R59.
Capital expenditure fell 19.4% to R888-million, taking capex intensity down to 8% from 10.2% a year earlier — well below the group’s full-year guidance of 12-15%. Telkom attributed the drop largely to the timing of multi-year Openserve projects, though a portion of spending again went towards the IT systems overhaul underpinning its business support systems transformation. The group said it would ramp up spending over the remainder of the financial year.
Openserve, the group’s wholesale fibre arm, grew revenue 5.6% to R3.32-billion, with external revenue up 18.2% and its Ebitda margin at 33.2%. It lifted its industry-leading fibre connectivity rate to 53.9%, having connected 843 563 of the 1 565 750 homes it has passed.
Telkom also used the update to defend Openserve’s move into retail, confirming it launched its own ISP in July and insisting the direct channel remained “fully aligned with our wholesale open-access strategy” — a move that has rattled some ISPs buying wholesale access from Openserve and drawn concern from the Internet Service Providers’ Association.
The laggard remained BCX, where revenue fell 10.9% to R2.59-billion. IT hardware and software revenue plunged 30.1%, hit by delivery and customer-decision delays that Telkom linked to input-cost pressures from geopolitical conflict, while Converged Communications revenue fell 11.1% as customers migrated off legacy voice and data.
Core IT services revenue was broadly flat, up 0.3%, though cybersecurity revenue rose 36.6% and cloud services 11.8%. BCX Ebitda edged up 2.6% to R194-million — on cost cuts, lower receivables impairments and better margins rather than growth — lifting its margin to 7.5%. Taukobong said the turnaround would take time as new management continued to reshape the unit.
Telkom expects group service revenue to grow in the mid-single digits, “potentially trending above the upper end of the range”, and reiterated its 12-15% capex intensity guidance for the year. — © 2026 NewsCentral Media
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