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Telkom landline and enterprise business lines have been hit due to the Covid-19 shutdown, but its consumer mobile phone business is flying, with Telkom Mobile overtaking Cell C to become South Africa’s third-largest mobile operator.
In a market update published on the JSE stock exchange news service on Friday afternoon, Telkom, which is near the conclusion of the first half of its 2021 financial year, said its business units were seen affected in different ways by the pandemic and the associated lockdown. He did not provide figures, but spoke in general terms about his performance.
“The consumer business benefited from increased demand for homeworkers and online education, while (the IT services business) BCX and small and medium-sized enterprises (SMEs) were affected negatively due to the national shutdown as corporate clients were under heavy financial pressure, “Telkom said. “Overall, the group’s earnings showed resilience in the face of this pandemic.”
The consumer segment has performed well, and the mobile business has maintained its growth trajectory during the first half of the year, Telkom said.
“Mobile data, which accounts for approximately 70% of the mobile business, was the main growth engine, driven by strong growth in mobile traffic. The mobile business continued to gain market share from its peers, both from a customer and revenue perspective, to become the third largest mobile telecommunications company in South Africa.
Telkom’s wholesale division, Openserve, enjoyed an increase in demand for fixed connectivity that resulted in an improved rate of fiber connectivity to the home. Similar trends were seen across Openserve’s Pure Connect product portfolio, which leverages existing broadband infrastructure and supports increased demand for data connectivity, the company said. However, the lockdown had a negative impact on corporate fixed voice volumes and this adversely affected Openserve.
‘Strong financial pressure’
The blockade also affected the businesses of BCX and SMEs, whose clients were subjected to “strong financial pressure.”
“The work-from-home migration negatively affected the corporate landline business, as use shifted to mobile connectivity, causing a significant decline in landline revenues. Enterprise customers reduced IT spending in the first half of the year and postponed some of their capital investment projects in response to the more uncertain environment caused by Covid-19, ”said Telkom.
“During this difficult time, management relentlessly focused on its sustainable cost management program to protect the group’s margin and Ebitda,” he said, referring to earnings before interest, taxes, depreciation and amortization.
“The benefits of the restructuring program were realized in accordance with the expectations of the management. The cost of mobile service was optimized, which had a positive impact on the profitability of mobile devices. Despite a significant decrease in the group’s fixed voice revenues with a higher margin, the group’s Ebitda and margin are generally holding. “
He also said that its liquidity “remains resilient, with a stable balance sheet.”
“No debt has been incurred since March 30, 2020. Management remains confident of a target of cash release initiatives of R700 million to R1 billion for the year while continuing to optimize working capital. The administration continued to be disciplined in the allocation of capital and the deployment of capital investments slowed down as a result of the national blockade, ”he said.
He added that he has entered into a payment plan with the South African Revenue Service to pay an outstanding liability (including interest) of R870 million, payable over a period until March 31, 2021, to be financed from our monthly cash flows. . Telkom said. – © 2020 NewsCentral Media
