Covid-19 lockdown hands Telkom a 'mixed bag' of financial results

Telkom says the process of modernising the network has resulted in decommissioning of some properties.
Telkom says the process of modernising the network has resulted in decommissioning of some properties.
  • Mobile business, which is now 10 years old, showed resilience as the work from home trend led to an increase in data usage.
  • Technology subsidiary Business Connexion (BCX) and Small and Medium Business were negatively impacted by the national lockdown, as customers came under severe financial pressure.
  • Telkom group revenue was down 0.4% to R21.3 billion, while BCX revenue decreased by 10.7% to R7.9 million.


Despite a surge in data revenue during the coronavirus lockdown, some segments of Telkom's business took a hit, with the firm's technology services Business Connexion (BCX) taking strain as key enterprise customers were affected.

According to the telecommunications giant's interim results to released on Tuesday, Telkom, which is 40.5 % owned by government, said BCX and the Small and Medium Business division were negatively impacted by the national lockdown, while data usage climbed to new levels.

CEO Sipho Maseko said during the early months of the lockdown, business entities were forced to suspend operations during the lockdown and were applying for payment holidays, and scaling down on IT projects as they came under pressure from months of low activity that affected their liquidity.

Maseko described the interim financial statements to for the six months ended 30 September as a "mixed bag".

Telkom acquired Business Connexion (BCX) in 2015 to bolster its ICT networks, as part of a process to give the company a competitive edge. The business has had mixed contribution to the Telkom group and in 2018 underwent a restructuring process to streamline performance.

Maseko said enterprise customers reduced information technology spend in the first half of the year and postponed some of their capital investment projects as a response to the heightened uncertainty caused by Covid-19.

BCX revenue decreased by 10.7% to R7.9 million.

Mobile business, which is now 10 years old, showed resilience as the work from home trend led to an increase in data usage. Mobile data now contributes over 70% of mobile service revenue.

"The massive demand in mobile broadband data translated to 80.8% growth in mobile traffic, with mobile data revenue increasing by 53.8%," said Maseko.

However, group revenue declined 0.4% to R21.3 billion, while headline earnings per share increased by 25.4% to 219.0 cents per share and basic earnings per share increased by 29.5% to 217.5 cents per share compared to the comparative period. 

The company, which is now the country's third largest based on service revenue, grew mobile broadband subscriber numbers by 23.3% to 9.6 million subscribers, with a 53.8% increase in mobile data revenue.

During the six months, Telkom's R900 million debt was repaid and finance charges on local and foreign debt decreased from R681 million in September 2019 to R500 million in September 2020 due to reduced interest rates as a result of the Covid-19 pandemic.

Earlier this year the company announced that it had entered into a payment plan with SARS to settle an  R870 million liability it was slapped with based on the tax treatment of the sale of a foreign subsidiary in 2012.

Telkom said as at 30 September, it had paid R66 million in interest towards its SARS debt.



We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
ZAR/USD
15.41
(+0.05)
ZAR/GBP
20.54
(-0.10)
ZAR/EUR
18.25
(+0.25)
ZAR/AUD
11.23
(+0.42)
ZAR/JPY
0.15
(+0.71)
Gold
1838.00
(-1.80)
Silver
23.57
(-2.46)
Platinum
926.00
(-1.72)
Brent Crude
45.18
(0.00)
Palladium
2339.00
(+1.23)
All Share
57147.31
(+0.94)
Top 40
52478.55
(+1.08)
Financial 15
11337.90
(+0.62)
Industrial 25
79917.53
(+1.49)
Resource 10
51771.17
(+0.65)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, and I've gotten it.
22% - 308 votes
No, I did not.
51% - 731 votes
My landlord refused
27% - 393 votes
Vote