Telkom dials up mobile numbers as landlines die
A surge in mobile broadband subscribers helped the company compensate for fewer landline customers, but profit suffered
Telkom managed to offset the continued slide of customer numbers for its traditional fixed-line telephone business with impressive growth in the mobile broadband market.
SA’s historic phone-monopoly suffered a 9.6% annual decline in fixed access line subscribers to 2.57-million while growing its mobile broadband customers 67% to 4.75-million.
Competing against its erstwhile subsidiary Vodacom in the mobile market helped Telkom grow its interim revenue 5.2% to R20.8bn for the six months to end-September.
But its net profit declined 0.4% to R1.6bn, and Telkom cut its interim dividend by 5% to R1.12 from R1.18.
Telkom segments itself into four divisions. Former JSE-listed computer group Business Connexion Group (BCX), which Telkom acquired in a long process first announced in 2007, is its largest revenue generator, contributing 44% of the group's total income.
Tuesday’s results statement confirmed reports that Telkom is retrenching BCX staff.
“We have commenced with the initiatives to contain costs to improve the profitability of the organisation. The second phase of cost containment initiatives is under way, and these include the consolidation of the offices and data centres, simplification of the organisational structure, reduction of the executive and middle management structure, and rationalisation of the product portfolio,” CEO Sipho Maseko said in the results statement.
What Telkom calls “consumer” is a close second to BCX, contributing 43% of the group’s total revenue.
The consumer division’s operating revenue grew 14.6%, driven by a 53.8% growth in mobile service revenue to R3.6bn.
“The impressive growth in the mobile business was supported by 50% growth in subscribers to 6.5-million, with the blended average revenue per user (arpu) increasing by 12.8% to R104 a month.
“Post-paid subscribers increased by 25.4% to 1.7-million subscribers,” Telkom said.
Openserve — described as a “wholesale infrastructure connectivity provider” — contributed 10% of the group’s revenue.
“Capital investment of R1.65bn focused on network modernisation. We have seen our national optical foot print expanding by over 10,000km to 161,119km, with over 2.6-million premises next generation access fibre passed,” Maseko said.
Telkom’s “other” division — which houses its Yellow Pages, Gyro, VS Gaming and Corporate Centre businesses — contributed 3% of the group’s revenue.