Telkom reports positive results, declining fixed voice business a worry - CNBC Africa

Telkom reports positive results, declining fixed voice business a worry


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Internet and data connection. PHOTO: Getty Images

Profit after tax increased 41.1 per cent to 773 million rand from 548 million rand in the previous comparative year.

The telecommunications provider also reported that operating revenue was up 0.3 per cent to 16.2 million rand from 16.1 million rand in the previous comparative year. This was due to higher mobile and It Business services revenue.

“The Groups financial performance indicates a challenging industry environment,” Telkom CEO Sipho Maseko said in a statement.

“Despite a considerable increase in the Groups earnings, owing to several once-off items, underlying operational earnings remain under pressure.”

[DATA TKG:Telkom] reported that its fixed-line voice usage revenue continued its declining trend, having decreased 7.7 per cent to 4 million rand from 4.4 million rand in 2012.

Fixed-line subscriptions revenue however grew 1.1 per cent to 3.88 million rand from 3.84 million rand in 2012 due to line rental tariff adjustments.

“These results show that we are improving efficiencies and laying the foundation to stabilise Telkom’s business performance,” said Maseko.

“We are actively cutting costs, the Group continues to generate strong cash flows and we are investing in our access network infrastructure which will improve our competitiveness and revenues in the years ahead.”

Telkom reported headline earnings of 224.2 cents from 101.1 cents. The earnings exclude the net curtailment gain recognised on the post-retirement medical aid liability.

The group’s Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) margin excluding the net curtailment gain and competition commission provision was reported as relatively flat at 24.3 per cent.

Telkom’s mobile network provision thrived, with mobile revenue having increased 55.4 per cent to 926 million rand. Mobile data revenue also increased 50.0 per cent to 303 million rand from 202 million rand in 2012.

“Telkom is working hard to capture the data opportunity in South Africa. Data revenue constituted 33.7 per cent of group revenue and increased by 3.1 per cent overall,” added Maseko.

Active mobile subscribers increased 6.9 per cent to 1 598 173, with a blended ARPU of 58.81 rand.

Capital expenditure for the group increased 49.5 per cent to R3.1 million rand from R2.1 million rand.

“Telkom has the most extensive infrastructure network in the country. We need to monetise that advantage and drive the take-up in high-speed broadband services enabled by our Next Generation Network,” said Maseko.

“Additionally, the National Broadband Plan has the potential to provide Telkom with the opportunity to improve the scale and efficiency of its network. There is a window of opportunity for Telkom to become the leader in data transmission, but we must act with speed and determination to commercialise our competitive advantage.”