Telkom gets an unexpected boost thanks to lockdown

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  • Telkom's steady growth has made it the country's third largest mobile operator.
  • The mobile business has been Telkom's main driver of growth, driven by mobile traffic.
  • Telkom says the lockdown has highlighted the need for reliable fixed broadband connectivity.

Telkom said on Friday the demand for internet during the national lockdown had benefited its business, with mobile data being the main driver of growth.

The telecommunication company, which is now the country's third biggest, said its revenue showed resilience during the lockdown period, despite the IT services company BCX and Small Medium Business being negatively impacted, as corporate customers came under financial pressure.  

"Migration to work from home negatively impacted the Enterprise fixed business as the usage was diverted to mobile connectivity leading to a significant decline in fixed voice revenue," the company said in a market update.

Telecommunication services were declared essential during the Covid-19 lockdown as the demand for internet surged, with the Independent Communications Authority of South Africa (ICASA) in April releasing temporary high-demand spectrum to mobile telecommunications companies in a bid to ease network congestion.

According to Telkom, the lockdown has re-emphasised the need for reliable fixed broadband connectivity.

"Mobile data, which contributes approximately 70% of the mobile business, was the main driver of growth, driven by strong growth in mobile traffic."

"The mobile business continued to gain market share from its peers, both from a customer and revenue perspective, to become the third-largest mobile telecom in South Africa in a period of ten years of establishment," it said.

The semi-privatised company, which started off as a fixed mobile operator, has seen steady growth in recent years, with the introduction of mobile and broadband offerings. In August, the company said its subscribers had stood at 11.8 million as at 31 May 2020.

In March, Telkom lost a long-standing legal battle with the South African Revenue Service (SARS) relating to the tax treatment of the loss that arose in the 2012 financial year on the sale of a foreign subsidiary.

On Friday, the company said it had entered into a payment plan with SARS "to pay the outstanding liability (including interest) of R870 million, payable over a period up to 31 March 2021."

"This will be funded out of our monthly cash flows," it said.

Telkom shares closed down 1.5% on Friday afternoon at R25.00.

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