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Sipho Maseko, CEO of Telkom
Telkom on Tuesday It said its mobile data revenue increased 54% in the first half of its fiscal year 2021, supported by an 81% increase in mobile traffic.
However, its fixed line business contracted dramatically, losing more than half a million customers since the end of March as consumers abandoned fixed lines for mobile services and Telkom itself aggressively cut off expensive legacy copper connections in favor of Alternatives -4G / LTE fiber.
Mobile customers increased 19% to 13.7 million with net adds of 2.2 million subscribers, making Telkom the largest fast-growing mobile operator in South Africa and ahead of the traditional third place in the industry Cell C.
Telkom Mobile expanded the margin by 13.2 percentage points to 29.9%, directly optimized its cost-to-income ratio from 53% in the prior period to 38% and more than doubled its earnings before interest, taxes, depreciation and amortization to R2.9 thousands of millions.
Telkom attributed the strong growth in mobile traffic to the blocking of Covid-19 and measures associated with working from home, as well as online education.
The group’s operating performance was solid, with Ebitda rising 6.3% to R5.9 billion, with a margin of 27.6%. Overall earnings per share soared 25.4%. However, investment in networks also declined during the period, with capital expenditures reduced by almost a third to $ 900 million.
Free cash flow
Adjusted free cash flow improved by R2.6 billion to R1.3 billion, compared to negative R1.3 billion in the previous year. Revenue, however, fell 0.4% to R21.4 billion.
“Telkom Mobile has performed exceptionally well, despite the negative impact of the national lockdown on parts of our business,” CEO Sipho Maseko said in a statement.
BCX’s business did not do so well due to a decline in corporate wireline revenue. Enterprise clients reduced IT spending in the first half of the year and postponed some of their capital investment projects in response to the increased uncertainty caused by Covid-19. This caused BCX’s IT business revenue to drop 8.6%.
The decrease in fixed voice volumes also negatively affected the Openserve wholesale division, where revenues decreased 13.6%, a change driven by a 22.7% contraction in fixed voice revenues. However, Openserve increased its fiber connection rate (the percentage of consumers who used its fiber services at home when they were available) to 53.8%.
The group had a cash balance of R3.9 billion at the end of September. It strengthened the balance sheet by repaying R 900 million maturing debt. Net debt to Ebitda improved from 1.3x in the full year to 1x now. – © 2020 NewsCentral Media
