On Tuesday, 12 November 2019, Telkom shared it’s interim results for the six months ended 30 September 2019, with revenue increasing 4.7% to R21.5 billion despite the challenging operating environment.
“Profitability was affected by deep investments in future growth, particularly in the mobile business – which is building critical mass and continues to gain market share as consumers search for value,” says Telkom Group Chief Executive, Sipho Maseko.
“With consumers under immense pressure as the economy struggles to gain traction, this was an important period for the group. We have made progress on our strategy and laid the foundation for growth, particularly as the economy starts to turn, and if government licences spectrum in a way that stimulates competition.”
Mobile service revenue was the main driver of revenue growth, increasing 56.6% to R5.6 billion as subscriber numbers surged 75.5% to 11.5 million.
Group profitability was affected by capital investments, higher hedging costs, higher finance charges and fair value movements linked to foreign exchange adjustments.
Capital investments totalled R4.3 billion in the period – representing 19.7% of revenue. More than half of the capital invested was in the mobile business, where capital expenditure rose 66% to R2.2 billion to support that division’s growth. The group also invested in accelerating the migration of customers to LTE and fibre.
Group EBITDA increased by 12.4% to R5.6 billion.
“Ongoing investments in new revenue streams continue to drive the overall growth of the group, although our deliberate strategy to accelerate the migration to new technologies has affected profitability in the short term,” says Maseko.
The strategy to migrate customers to next-generation technologies contributed to a 19.1% decline in fixed voice and interconnection revenues across the group. Despite this, Openserve’s and BCX’s overall revenue declines in these businesses were contained at 8.5% and 3.3% percent respectively, thanks to growth in new revenue streams.
The board declared an interim gross ordinary dividend of 73.17 cents per share.
“The operating environment remains challenging, but the imminent licensing of new spectrum, coupled with macroeconomic reforms and the investments we continue to make in our own business, means we are optimistic about the years ahead,” continues Maseko.
“We have shown our commitment to South Africa by investing in the economy at a time when the country needs it most. We are confident that these investments will pay off.”
Edited by Jenna Cook
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