Transformation strategy proving positive for Telkom - CNBC Africa

Transformation strategy proving positive for Telkom

Earnings

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Telkom produced positive results despite the pressure on fixed-line revenues. PHOTO: Getty Images

“Our efforts to turn Telkom around are starting to produce results. In the past financial year, in line with our guidance to stabilise revenues, we have achieved revenue growth of 1.1 per cent for the year,” [DATA TKG:Telkom] chief executive, Sipho Maseko said.

“We still face significant challenges largely as a result of the sustained pressure on our fixed-line revenues.”

(READ MORE: Telkom reports positive results, declining fixed voice business a worry)

The South African integrated voice, data, fixed, mobile, IT and data centre solutions provider saw revenue increase to 33.0 billion rand for the year ending 31 March 2014 from 32.8 billion rand for the same period in 2013.

Telkom’s operating revenue also showed an increase, from 32.1 billion rand in the 2013 fiscal year to 32.4 billion rand in 2014.

“Operating revenue increased due to higher mobile handset and equipment sales, growth in mobile and IT Business services data revenue, offset by a decline in voice revenue,” it said.

The group reported an operating profit of 4.6 billion rand in 2014 from a loss of 11.1 billion rand in 2013 and a profit before taxation of 4.4 billion rand from a loss of 11 billion rand in 2013.

Basic earnings per share from total operations stood at 748.5 cents in 2014 and diluted earnings per share stood at 744.8 cents in 2014 following a loss per share of 2,303.0 cents in 2013.

“Going forward, we expect to see continued pressure on fixed-line voice revenues, intensified by strong competition, a challenging macro-economic environment and effects of regulatory interventions,” Maseko said.

“Our objective to further stabilise and grow revenue is dependent on effectively positioning our resources to drive value and achieving efficiencies across our operating cost base. This will require us to focus our capital expenditure on areas that generate satisfactory returns for our shareholders, and to avoid unprofitable operations.”

Maseko added that Telkom also aims to successfully conclude the proposed MTN South Africa and Business Connexion (BCX) transactions within the current financial year.

(READ MORE: Business Connexion CEO passes away)

The group announced on Thursday that both it and BCX had jointly agreed to put all activities pursuant to the transaction on hold following the passing of BCX chief executive, Benjamin Mophatlane, on Wednesday.

The Takeover Regulation Panel has reportedly granted an extension for the posting of the circular relating to the transaction until 11 July 2014.

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