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Telkom outpaces rivals, dials up R3.6bn revenue

Telkom is upping the ante in the mobile business. Photo: Bloomberg

Telkom is upping the ante in the mobile business. Photo: Bloomberg

Published Nov 14, 2018


JOHANNESBURG – Telkom is upping the ante in the highly competitive mobile business, with the group’s average revenue per customer increasing at a more rapid pace than that of its rivals. 

The group said yesterday the mobile business was a growth driver in the six months ended September with service revenue growth of 53.8 percent to R3.6 billion, supported by strong customer growth of 50 percent to 6.5 million.

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Telkom chief executive Sipho Maseko said the company’s affordable data-led products and broadband product propositions continued to resonate well with consumers.

“Mobile data was a major contributor to revenue with a 55.8 percent growth, supported by 121 percent growth in data usage,” Maseko said.

“To capitalise on the success of our mobile business, we have begun migrating selected traditional fixed-line customers to wireless technologies, such as Long-Term Evolution”.

The group’s post-paid subscribers increased by 25.4 percent to 1.7 million subscribers, while pre-paid subscribers increased 60.7 percent to 4.9 million in the period under review.

Maseko said the company’s FreeMe plan remained the core value proposition within its post-paid offering. Approximately 41 percent of the firm’s post-paid subscribers had adopted the FreeMe product suite as their base plan with the average revenue per user (ARPU) increasing by 33.5 percent to R71. In comparison, Vodacom on Monday said its prepaid ARPU for the six months ended September was down 6.9 percent.

MTN’s ARPU from postpaid customers averaged R142.78 a month during the September quarter, up from R140.23 in the June quarter.

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Ofentse Dazela, a director of pricing research at Africa Analysis, said Telkom remained aggressive in the market and continued to offer the lowest-priced data bundles both in the prepaid and post-paid segments.

”The operator’s FreeMe plans have also experienced good market reception thus far, and are driving up data traffic and underpinning this growth as well,” Dazela said. ”I expect this trend to continue, although a bit of push-back should be expected from Cell C, which has recently restructured its prepaid bundles and now offers more value to prepaid customers, including free additional night data.”

Vodacom and Telkom last week announced a long-term, multibillion-rand agreement whereby Telkom would obtain roaming and facilities leasing services from Vodacom with full effect from June 2019. The group’s revenue increased 5.2 percent to R20.8bn, mainly driven by a 53.8 percent increase in mobile service revenue.  However, Telkom’s profit was down 12 percent to R1.42bn compared to the R1.63bn reported in the comparative period. The group also slashed its interim dividend by 5.1 percent to 112 cents a share, from 118c.

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The company’s subsidiary BCX also reported underwhelming results, with revenue declining 4.3 percent to R10.2bn. Telkom blamed this decline to a slide in voice revenue. BCX last week informed employees and unions that it has started a Section 189 process. Around 790 employees in all divisions will be impacted. 

Asief Mohamed, chief investment officer at Aeon Investment Management, said: "We are encouraged by the increase in mobile subscribers and data off a low base. This is largely a result of competitive and predatory pricing in the prepaid segment. Longer-term prospects for Telkom are subdued as we expect declines in traditional channels of the fixed-line segment.” 


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