Mobile helps boost Telkom earnings

Cape Town – Fixed line revenues are tumbling but mobile has helped spur a jump in earnings at Telkom, the company said in its interim results statement on Monday.

Telkom's group net revenue increased 1.2% year-on-year for the six months ended September 2015 from R13.29bn to R13.45bn.

A key challenge for the company has included its fixed-line voice usage revenue which decreased 14.1% to R3.1bn. The number of Telkom fixed lines in South Africa also continued to fall from 3.5 million in September 2014 to 3.3 million in September 2015.

But revenue from mobile service and subscriptions increased 41% to R1.2bn and data revenue jumped 69% to R711m.

“We are pleased with the improved performance of our mobile business and our multiyear cost efficiency programme and will continue with these initiatives to bring about further improvements,” said Telkom Group chief executive officer Sipho Maseko in a statement.

Growing mobile revenues helped the group also record a 13.9% increase in headline earnings per share. The company’s operating expenses have also declined 2.3% to R9bn amid job cuts.

While debt levels have increased in the period under review, Telkom said it intends to spend R10bn through its Openserve wholesale broadband vehicle which it hopes will connect one million homes to fibre broadband by 2018.

Telkom also said that despite strong competition, its ADSL revenue increased by 5%. Capital expenditure increased by 20% to R2.3bn as the firm expands its fibre and mobile networks.

That investment is vital for Telkom which has just 2.2 million mobile subscribers, making it the smallest player in SA. The company is considering a bid for Cell C which should give it around 25 million subscribers should the deal get the green light.

The company is also racing to develop its LTE or higher speed long term evolution sites to compete with Vodacom and MTN.

Leading SA operator Vodacom said that it expects data to make up half of revenue by 2018.

For Telkom, moving to mobile is key as fixed line voice revenue declined by 3%.

“Although challenges remain, we are confident that our turnaround strategy and other growth initiatives will deliver the results we have been working toward,” said Maseko.

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