Economic conditions put strain on Telkom results

2017-11-10 11:53 - Kyle Venktess, Fin24
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Sipho Maseko, Telkom CEO. (Muntu Vilakazi )

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Johannesburg - A tough economic environment has put strain on fixed and mobile operator  Telkom, according to company CEO Sipho Maseko.

Speaking to Fin24 after the announcement of Telkom’s results for the six months ending September 2017, Maseko said that the company’s performance had been impacted by South Africa’s weak economic climate.

“Given low business confidence and technically recession, the results were to be expected but we were able to respond by lowering costing for customers to generate revenue,” he told Fin24.

Telkom’s operating revenue was down 0.6% from R20.2bn to R20.1bn, with net operating revenue down to R15.7bn from R15.9bn the year before. 

Earnings before interest, taxes, depreciation and amortisation stood at R5.2bn, down by 1.9% from R5.3bn. Capital expenditure to revenue was reported at R3.9bn, up 9.2% from R3.6bn in 2016.

However, Telkom’s mobile offerings grew exponentially with mobile service revenue recording a 43.2% growth supported by a 35.9% increase in the active subscriber base to 4.4 million with a blended average revenue per user (ARPU) stable at R92.

The company’s infrastructure fell to 999 000 fixed broadband subscribers, 1.9% down from the year before.

Boost from mobile

Telkom’s competitive FreeMe offers bolstered subscriber growth with the company reporting a postpaid subscribers increase of 36.3% to 1.3 million and prepaid subscribers grew 35.7% to 3 million.

“We have seen massive growth from the mobile side, with subscriber numbers increasing due to the FreeMe offerings,” Maseko said.

Mobile service revenue grew 43.2% to R2.2bn, up from R1.5bn in 2016, while data revenue grew to R6.5bn from R5.9bn.

Telkom recently also introduced a zero-rated data streaming service - FreeMe Lit - as an add-on to its data packages, which Maseko said customers were responding well to.

“With data-intensive services we are planning on investing in further infrastructure to support these services. We are looking at metropolitan areas, but also covering schools and hospitals where services are most needed,” Maseko told Fin24.

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