Telkom reports annual revenue decline

Telkom, one of South Africa's leading telecommunication companies, has recently reported a 1% decline in annual revenue, amounting to 42.8 billion rand for the year ending in March. Despite this decrease in revenue, the telco group has managed to achieve a 2.5% climb in headline earnings per share. Serame Taukobong, the Telkom Group CEO, highlighted the difficult operating environment the company had to navigate, attributing it to challenging economic conditions and increased pressure on the top-line. Taukobong mentioned that the open-serve business within Telkom remained steady in terms of revenue, signaling a shift towards next-generation networks and an increasing demand for fiber connectivity. He also noted that the mobile business held firm, even though consumers were facing significant cost pressures. One of the key trends observed by Telkom is the movement of consumers from traditional fixed lines to mobile and LTE devices, as well as the transition from copper to fiber connections. The company is actively promoting the migration to newer generation platforms to enhance service quality and speed for its customers. Despite the rising inflation rates, Telkom has managed to keep operating expenses below inflation, primarily through continuous cost management efforts and the digitization of its network. Looking ahead, Telkom is focused on modernizing its network, enhancing digital customer service channels, and driving efficiencies throughout its value chain to contain costs and improve operational effectiveness. The company is also exploring opportunities in the fintech space, leveraging its data-savvy mobile user base to establish strategic partnerships and expand into financial technology services. In the face of challenges experienced by its BCX business segment, particularly supply chain constraints and chip shortages, Telkom is seeking partnerships with experts in cybersecurity and IoT, aiming to capitalize on growth opportunities in these areas. To address the skills gap in the country, the company is looking to forge partnerships with entities in markets like India, where similar expertise and scale exist. Taukobong emphasized the importance of infrastructure investment, particularly in fiber and data centers, as Telkom aims to cater to the increasing demand for high-speed connectivity and data storage. The company sees potential growth opportunities in providing fiber-to-the-tower services to facilitate 5G traffic delivery and attracting hyper-scalers to invest and co-locate in its data centers. Despite the headwinds faced in the telecommunications industry, Telkom remains optimistic about its strategic direction and growth prospects, focusing on innovation, partnerships, and efficiencies to navigate the challenging landscape and drive business sustainability and profitability.