Telkom, South Africa’s third-biggest mobile operator, says it has grown its mobile subscriber base almost a fifth in its half year to end-September, helping to drive revenue growth in this business off a high base, given operators benefited from a pandemic-induced data-demand surge in 2020.
Active mobile subscribers rose 18.8% to 16.26-million in Telkom’s first half, helping to cushion the effects of a continued decline in the group’s fixed-line business as customers migrate to new technologies. Telkom, however, noted the rate of decline for fixed-line had slowed, citing an improvement in economic activity relative to the same period in 2020.
Group revenue was flat at R21.29bn, while profit rose just over a quarter to R1.36bn, with the group benefiting from lower finance costs, cost controls and a drop-off in foreign-exchange losses.
Finance charges reduced by 25.2% to R541m, with Telkom repaying maturing debt of about R1.1bn in the previous financial year, and repaying a further R100m in its first half. The group had net debt of R12.6bn at the end of September.
Fair value movements and foreign exchange losses reduced significantly by 91.9% to R17m, partly due to a favourable hedging position for the mobile operator.
Mobile data revenue grew by 6.1% to R6.37bn, supported by 10.3% growth in mobile broadband customers to 10.6-million, which represents almost two thirds of the group’s customer base. This performance was delivered against a strong first half of the previous year, which saw a surge in data demand due to the pandemic.
Telkom opted not to pay a dividend, but said it remained committed to reinstate the dividend policy by the end of the current financial year.
As the growth in the mobile business normalises and the fixed-line business is starting to stabilise, Telkom said management would turn its focus to its IT business.
IT business revenue declined by 7.9% to R3.87bn, mainly attributable to delayed projects due to a slower-than-expected economic recovery, backlogs resulting from global supply chain constraints, a global semiconductor chip shortage, and the fallout from July’s civil unrest.
Telkom said on Tuesday it is investigating a “strategic intervention” in the business which could include, but is not limited to, introducing a strategic partner.
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