Telkom reported a 19 percent jump in mobile customers during lockdown to 13.7 million during the period with the mobile business delivering R8.28 billion in service revenue, marking a 47.8 percent growth compared to a year earlier. Photo: Simphiwe Mbokazi African News Agency (ANA)
Telkom reported a 19 percent jump in mobile customers during lockdown to 13.7 million during the period with the mobile business delivering R8.28 billion in service revenue, marking a 47.8 percent growth compared to a year earlier. Photo: Simphiwe Mbokazi African News Agency (ANA)

Growth in mobile business places fixed-line giant at number 3 in SA

By Dineo Faku Time of article published Nov 11, 2020

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JOHANNESBURG – Partially state-owned Telkom said on Tuesday that growth in its mobile business during the six months ended September had placed it solidly as the country's third-largest mobile operator on service revenue.

Telkom reported a 19 percent jump in mobile customers during lockdown to 13.7 million during the period with the mobile business delivering R8.28 billion in service revenue, marking a 47.8 percent growth compared to a year earlier.

The group said that its blended average revenue per user increased 36.7 percent to a historic high of R113, mainly due to unprecedented Covid-19 data demand.

Telkom said that its mobile business’ earnings before interest, taxation, depreciation and amortisation had doubled through a 142 percent leap to R2.9 billion.

Chief executive Sipho Maseko said that the 10-year-old mobile business which on Monday announced it had partnered with the SABC to launch a new streaming channel had made substantial progress.

“We see this as a strong platform that will enable us to strongly challenge the 2020s so that by the time we get to 2030 we must be clear contenders for winning in data, 4G and 5G, and I think we have built a strong platform for that,” Maseko said.

The group recorded a 25.4 percent growth in headline earnings per share to 219 cents per share while basic earnings per share increased by 29.5 percent to 217.5 cents per share compared to the prior period partially offset by an increase in the effective tax rate from 29.9 percent in the prior period to 34.8 percent.

Telkom said group revenue during the period declined slightly by 0.4 percent to R21.3bn despite grappling with a 29.5 percent decline in fixed voice and interconnection.

Openserve’s revenue declined by 13.6 percent compared to the prior period, driven by fixed voice revenue.

BCX and Yep! previously known as Telkom Small and Medium Business were negatively impacted by the national lockdown as customers were under severe financial pressure.

“We saw customers requesting extended payment terms and applying for payment holidays to manage their liquidity,” Telkom said, adding that migration to work from home had negatively impacted the Enterprise fixed business as usage was diverted to mobile connectivity, leading to a significant decline in fixed voice revenue.

Enterprise customers cut their IT spend and postponed some of their capital investment projects as a result of the pandemic, resulting in BCX IT business revenue declining by 8.6 percent.

Revenue from Gyro masts and towers grew 7.7 percent to R628 million despite the lockdown.

Telkom reiterated its commitment to the value unlock strategy, saying it was a key component of the group's capital allocation framework.

The group said that its Gyro business was at an advanced stage of the unlock process and would be followed by Openserve thereafter.

“In the first half of the year, we commenced with a market sounding exercise to gauge interest on Gyro masts and towers. We are in the process of concluding the analysis of proposals received,” said Telkom.

Telkom shares declined 7.62 percent on the JSE on Tuesday to close at R29.84.

BUSINESS REPORT

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