Group revenue grew 3.9% to R10.91bn year on year in first quarter
05 August 2024 - 09:46
UPDATED 05 August 2024 - 19:27
byJacqueline Mackenzie and Mudiwa Gavaza
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Telkom has had a strong first quarter as its earnings were boosted by its next-generation revenue streams, now accounting for more than 80% of the pie.
The state affiliated telecom company has been on a mission to reduce reliance on its once thriving fixed line business, for a number of years. As recently as September 2018, that business — now seen as legacy — had accounted for 53% of revenues, underscoring the shift made by the Centurion based company.
The legacy of Telkom had also been characterised by the use of old copper cable technology. Since then, the group has invested in modernising its systems to make use of fibre and other newer methods of transmitting data.
Group earnings before interest, tax, depreciation and amortisation for the quarter ended June was up 24.1% to R2.778bn, with next-generation revenue up 7%, the company said in a statement on Monday.
Group revenue grew within guidance and advanced by 3.9% to R10.91bn year on year driven by growth in demand for its next-generation offerings.
Key contributors to strong next-generation growth include mobile service revenue growth of 9.5%, fixed data next-generation revenue growth of 7.1% and information technology revenue growth of 10.3%.
“We saw continued momentum in demand for data traffic and mobile with fixed traffic growing 25.8% and 33%, respectively year on year. Our mobile subscribers advanced by 14.6% and surpassed the 21-million mark with a stable prepaid ARPU [average revenue per user] and postpaid base, while homes connected with fibre grew by strong double digits, at 19.5% year on year.”
These key performance drivers propelled next-generation revenue growth, supported by reduced direct costs resulting from ongoing cost optimisation projects.
Mobile revenue was up 5.3% to R5.74bn, with mobile service revenue 9.5% higher and mobile data revenue up 12.9%. Mobile earnings before interest, taxes, depreciation and amortisation (ebitda) was up 35.7% to R1.54bn.
Openserve fixed data next-generation revenue grew 7.1%, with ebitda up 16.8% to R1.02bn.
BCX revenue rose 2.4% to R3.175bn and Swiftnet’s revenue increased 5.2%.
During the period, Telkom made R161m in proceeds from noncore property disposals.
“Telkom had a good start to the financial year with pleasing performance on the top line benefiting from our data-led strategy and compelling value propositions. Our next generation revenue streams continued their positive momentum and grew by R576m, an increase of 7%. Next-generation revenues now comprise 80.7% of group revenue,” CEO Serame Taukobong said.
“We continue to focus on cost containment while simultaneously monetising our networks by adding to our mobile sites and expanding fibre footprint where these investments contribute to top line growth and overall profitability.”
As part of the push to focus on businesses that it has an advantage in, Telkom recently signed a deal to sell off the Swiftnet masts and towers unit for R6.75bn.
Ebitda growth is expected to moderate for the full-year driven by a higher base from the second quarter to the end of the 2024 financial year, it said.
On a day that saw broad loss across the sector with MTN shares down 4.39% and Vodacom shaving off 2.69% from its stock price, Telkom’s earnings report appears to have helped it buck the trend, trading in positive territory on Monday.
Telkom share were up 0.6% at R23.32 by 2.45pm on Monday. The stock is down 21.27% so far in 2024.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Telkom earnings lifted by next-generation revenue
Group revenue grew 3.9% to R10.91bn year on year in first quarter
Telkom has had a strong first quarter as its earnings were boosted by its next-generation revenue streams, now accounting for more than 80% of the pie.
The state affiliated telecom company has been on a mission to reduce reliance on its once thriving fixed line business, for a number of years. As recently as September 2018, that business — now seen as legacy — had accounted for 53% of revenues, underscoring the shift made by the Centurion based company.
The legacy of Telkom had also been characterised by the use of old copper cable technology. Since then, the group has invested in modernising its systems to make use of fibre and other newer methods of transmitting data.
Group earnings before interest, tax, depreciation and amortisation for the quarter ended June was up 24.1% to R2.778bn, with next-generation revenue up 7%, the company said in a statement on Monday.
Group revenue grew within guidance and advanced by 3.9% to R10.91bn year on year driven by growth in demand for its next-generation offerings.
Key contributors to strong next-generation growth include mobile service revenue growth of 9.5%, fixed data next-generation revenue growth of 7.1% and information technology revenue growth of 10.3%.
“We saw continued momentum in demand for data traffic and mobile with fixed traffic growing 25.8% and 33%, respectively year on year. Our mobile subscribers advanced by 14.6% and surpassed the 21-million mark with a stable prepaid ARPU [average revenue per user] and postpaid base, while homes connected with fibre grew by strong double digits, at 19.5% year on year.”
These key performance drivers propelled next-generation revenue growth, supported by reduced direct costs resulting from ongoing cost optimisation projects.
Mobile revenue was up 5.3% to R5.74bn, with mobile service revenue 9.5% higher and mobile data revenue up 12.9%. Mobile earnings before interest, taxes, depreciation and amortisation (ebitda) was up 35.7% to R1.54bn.
Openserve fixed data next-generation revenue grew 7.1%, with ebitda up 16.8% to R1.02bn.
BCX revenue rose 2.4% to R3.175bn and Swiftnet’s revenue increased 5.2%.
During the period, Telkom made R161m in proceeds from noncore property disposals.
“Telkom had a good start to the financial year with pleasing performance on the top line benefiting from our data-led strategy and compelling value propositions. Our next generation revenue streams continued their positive momentum and grew by R576m, an increase of 7%. Next-generation revenues now comprise 80.7% of group revenue,” CEO Serame Taukobong said.
“We continue to focus on cost containment while simultaneously monetising our networks by adding to our mobile sites and expanding fibre footprint where these investments contribute to top line growth and overall profitability.”
As part of the push to focus on businesses that it has an advantage in, Telkom recently signed a deal to sell off the Swiftnet masts and towers unit for R6.75bn.
Ebitda growth is expected to moderate for the full-year driven by a higher base from the second quarter to the end of the 2024 financial year, it said.
On a day that saw broad loss across the sector with MTN shares down 4.39% and Vodacom shaving off 2.69% from its stock price, Telkom’s earnings report appears to have helped it buck the trend, trading in positive territory on Monday.
Telkom share were up 0.6% at R23.32 by 2.45pm on Monday. The stock is down 21.27% so far in 2024.
mackenziej@arena.africa
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.