Focused delivery sees Telkom post healthy results

Telkom today announced strong group annual results for the year ended 31 March 2004, with healthy increases in operating revenue and operating profit, positive cash flow growth and excellent growth in both headline and basic earnings per share. Group financial highlights for 2004:

* 8.8% group revenue growth to R40.795 million
* 39.5% growth in operating profit to R9.088 million
* 40% group EBITDA margin
* Group return on assets of 18%
* Net debt to equity of 61%
* Total dividend of 200n cents per share paid for the year

Commenting on the results, Group CEO of Telkom, Sizwe Nxasana said: "The management of the Telkom Group are pleased to report strong results in our first full year as a listed company that has seen us execute well on strategy and deliver growing returns to our shareholders.

"In our fixed-line business, we expanded operating margins by aggressively defending revenues and systematic streamlining, while our mobile business continued to deliver robust growth by winning customers in the local market and in other African countries. These achievements underpinned the generation of strong cash flows, allowing the group to pay down debt and invest capital in driving growth and supporting ongoing cost savings.

"This positive momentum, reinforced by a strengthened capital structure and a relatively buoyant economic environment, enabled the group to meet and exceed its performance targets for the year, and deliver on our core strategic objective of returning value to shareholders."

2004 saw the Telkom Group achieving robust operational performance across all levels of the business with delivery against its three strategic pillars of customer growth and retention, operational efficiencies and innovation and sustaining the development of the marketplace.

Key achievements included:

* 14% growth of data revenue, 44% growth of internet subscribers, 17% growth of ISDN channels and 661% growth of ADSL subscribers.
* The launch of VPN supreme.
* Growth of voicemail accounts to nearly 1 million. Value-added fixed-line voice packages penetrate 64% of residential customer base.
* The introduction of new fixed-line calling plans like Xtratime.
* The winning of 14 international call centre customers.
* The introduction of online ordering, payments and billing.
* Re-branded TelkomDirect retail outlets.
* The distribution deal with Vodashop.
* Property development deals to ensure upfront communications availability.
* Mobile customer growth of 30% to 11.2 million customers with contract customer growth of 20%.
* Mobile gross connections of 6 million compared to 4 million in prior year.
* African mobile customer growth of 93%.
* Mobile data revenue growth of 59%

The group has demonstrated its ability to maintain its leadership position, balance its commitments as an active and responsible corporate citizen, and continue to deliver healthy returns to shareholders.

Looking at future prospects, Telkom CEO, Sizwe Nxasana said: "The optimisation of the group`s capital structure will support the appropriate allocation of cash to ongoing cost-saving initiatives and pursuing new growth opportunities, while returning dividends to shareholders.

"Although we will continue to look inward to extract further operating efficiencies, our focus will increasingly shift outward to seek new growth opportunities. Growth is expected to come from aggressive movement into selected new market areas, such as data, and exploiting synergies between fixed-line and mobile. Additionally, in both our businesses we will consider pursuing African expansion and stand to benefit from growing domestic markets as SA`s socio-economic transformation process accelerates and yields new consumer and business customers."