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Data gains not enough for Telkom

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 17 Nov 2014
Telkom is transferring 41.9% more data across its network than a year ago.
Telkom is transferring 41.9% more data across its network than a year ago.

Data now makes up 34.2% of Telkom's operating revenue, contributing R5.4 billion to its income stream, up from 33.9% a year ago.

However, this is insufficient to offset the 3.8% decline in fixed-line revenue, as voice revenue continues to drop, says CFO Deon Fredericks. He notes Telkom now has almost a million ADSL subscribers, a 7.4% gain year-on-year, and Telkom is now transferring 41.9% more data across its network.

Fredericks says the increase in volume is not enough as Telkom faces pricing pressure and the challenge of monetising its network.

In the six months to September, fixed voice use dropped 12.9%, accelerating from the 7.7% drop the operator recorded a year ago. Fixed voice subscriptions only gained 0.7% in the same period, to R3.9 billion.

Voice is still the largest segment of income for Telkom, accounting for 53.9% of its operating revenue to add R8.57 billion in the first half. However, this contribution has dropped from 55.8% a year ago. Fredericks says this is Telkom's "biggest challenge" and something it must get right.

Overall, the operator recorded all but flat revenue, which only gained 1.6% to R13.3 billion. Its bottom line came in at R1.2 billion, down from last year's R3 billion, although the six months to September 2013 benefitted from R2.17 billion in once-off cost savings.

Telkom's profit was also affected this year by the R325 million it paid out in early severance and voluntary retirement packages to let 406 staff members go. On a normalised basis, profit gained from R791 million to R1.4 billion.

However, Telkom's operations have yet to show significant growth, as operating profit declined from R3 billion to R1.6 billion. The telco also continued to shed fixed lines, which have dropped from 3.7 million to 3.5 million, and voice operating revenue declined 4.1% to R7.8 billion.

During the interim period, mobile data revenue gained 39.3%, which Telkom says is "promising growth".

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