A tough year for Telkom

2011-06-13 09:22

Telkom had a tough year due to increased competition and regulatory intervention, the telecommunications operator said on the release of its annual results today.

“The year under review has been tough with revenue declining 5.2% to R33.4 billion,” said Nombulelo Moholi, group chief executive officer, in a statement.

“Competition, pricing pressures and regulatory intervention have all had an impact on our revenue.”

Telkom’s normalised headline earnings per share from continuing operations – a measure of profit – for the year ending March 31 2011, decreased by 35% to 444.9 cents.

Moholi said declines in Telkom’s traditional fixed-line voice revenue would continue. However, data revenue increased by 7.7% to R10.7 billion.

The company declared a full-year dividend of 145 cents a share.

It would focus on newer ventures like 8.ta which was launched in October to provide mobile voice services, data services and handsets sales.

Said Moholi: “It is an exciting venture for Telkom and provides an essential tool for providing customers with a differentiated service through our ability to provide the full suite of communication tools.

“It has not been easy. The growth of our network and distribution channels has encountered delays.”

Telkom said that by March 31, 8.ta had 1 199 596 subscribers.

Telkom would also focus on driving its broadband business through convergence and bundling, as well as consolidating its African subsidiaries and exiting the Multi-Links business in Nigeria.

“The decision to exit the Multi-Links CDMA business in Nigeria is but one of the key decisions taken in the past financial year.”

Telkom said it had “neither the agility to seize market opportunities nor the ability to absorb competitive pressures ad infinitum”.

It therefore needed to “aggressively tackle the cost conundrum”. “Labour support is vital in this area.”

In May, trade union Solidarity said Telkom wanted to include a formal mechanism for voluntary severance packages in this year’s wage agreement.

The company had already given more than 1 650 permanent employees voluntary retrenchment packages.

In addition to tackling labour, Telkom said it needed to increase its “operational agility” which meant “designing the right business structures and processes to spot and execute quickly on revenue and cost opportunities”.

“Then we need to identify the most important elements of our business in terms of profitability and growth and equip these areas with financial resources and our best skills.”

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