‘Cheap’ FreeMe packages help boost Telkom’s earnings

2016-11-15 11:20 - Gareth van Zyl, Fin24
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Telkom. (Duncan Alfreds, Fin24)

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Cape Town - Low cost FreeMe contracts helped boost Telkom’s’ results for the six months ended September 2016, said the company in its half-year results statement.

Telkom on Tuesday said its earnings for the six months ended September 2016 rose 20% as the company recorded its first-ever profit for its mobile business.

Operating revenue across the Telkom business was also up 20.6% to R20.2bn.

READ: How Telkom's new packages compare to MTN, Vodacom

Meanwhile, the company’s mobile broadband revenue grew 43.2% to R1bn supported by 2.3m mobile broadband customers, an increase of 44.5% compared to the prior corresponding period.

The company further reported that its earnings before interest, taxes, depreciation and amortisation (Ebitda) at its mobile unit was up up 678.4% to R214m compared to a loss of R37m for in the same period last year.

“The mobile business contributed positively to group Ebitda in the period compared to a negative Ebitda contribution in the prior corresponding period,” said Telkom.

“The splendid performance in mobile was as a result of additional stores and  channels, competitive products and pricing such as deal of the month campaigns, along with the recent launch of FreeMe,” said the company.

Telkom launched FreeMe in July this year. The packages consist of a “a simple plan, available in six data sizes”.

The six data size contracts are priced at monthly costs of R99 for 1GB, R149 for 2GB, R299 for 5GB, R399 for 10GB, R599 for 20GB and R999 for unlimited data.

Data from local contract research firm Tariffic indicated that Telkom’s FreeMe packages are priced lower than MTN’s My MTNChoice+ packages, Cell C’s ChatMore and Pinnacle packages, and Vodacom’s SmartMore Data deals.

And Telkom explained how the FreeMe packages have become a hit for the company.

“FreeMe continues to be a very popular offering with customers and has performed even better than our initial expectations. We saw increased gross connections from both existing customers and new to franchise customers,” said Telkom.

“In the period we sold approximately 170 000 prepaid FreeMe bundles, with over 70% of sales coming through our channels,” the company added.

Telkom said that it further plans to migrate its “postpaid legacy plans to FreeMe will begin in November 2016".

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