Telkom posts flat revenue as legacy business suffers

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 13 Jun 2023
Serame Taukobong, group CEO of Telkom.
Serame Taukobong, group CEO of Telkom.

Telkom Group has reported flat revenue, with earnings up less than 1%, as legacy services and load-shedding put pressure on its performance.

The telephony group today reported its full-year results for the year ended March, revealing revenue was marginally up by 0.9% to R43 138 million. This is amid challenging trading conditions, as it continued to manage the transition to next-generation technologies, investment in the mobile postpaid base and the impact of interrupted power supply.

Traditional or legacy business services remain the biggest hindrance to the telco’s performance, with fixed-voice and legacy revenues declining by 4% to R12 897 million.

Despite this, the group says its mobile business continued to drive growth in the consumer segment – mobile services revenue grew 1.8% and mobile customers increased 7.8% to 18.3 million.

The group says its postpaid strategy paid off, as the postpaid customer base grew by 11% to reach three million customers, while the prepaid customer base grew by 7.2% to 15.3 million.

Group EBITDA decreased by 19.8%, excluding a R1 065 million provision for restructuring costs.

Serame Taukobong, group CEO of Telkom, says: “We extended our network footprint, using the newly-acquired spectrum to enhance LTE coverage and launch 5G services. This benefited the mobile broadband subscriber base, which grew 9.2% to 11.6 million; currently 63.7% of our total mobile base uses wireless broadband.”

Overall revenue for Telkom Consumer was stable at R25 673 million. Mobile operations saw revenue growth of 4% and a 14.8% upswing in handset and equipment sales revenue. This was offset by the decline in traditional copper-based voice services, which now represent a reduced 5.8% of total external revenues, according to the group.

Taukobong points out next-generation (NGN) data-led products now represent close to 70% of the group’s revenue base.

In the year, Telkom-owned fibre network operator Openserve continued on its growth trajectory, providing open-access connectivity across SA with fixed-data NGN revenue growing by 10.2%, driven by increased rollout of fibre and healthy growth in carrier and enterprise services, says Telkom.

Homes connected grew by 26.7% to reach 492 812, as the connect-led strategy maintained a connectivity rate of 47.4%.

“We expanded the fibre footprint across all channels, increasing the number of homes passed with fibre and surpassing the one million homes mark,” Taukobong notes.

Turning to BCX, the ICT services unit maintained stable revenue levels at R14 252 million, driven by 9.1% growth in the IT business.

“BCX had a challenging year but managed to maintain stable revenue levels,” he comments.

“Performance was driven by growth in the IT business, which was offset by declines in the converged communications business.

“The IT business growth was largely due to double-digit revenue growth in the hardware and software business, albeit at lower margins.

“The converged communications business continued to be impacted by migration to next-generation technologies and robust competition in the market.”

Telkom says its Swiftnet masts and towers business saw marginal revenue growth of 0.9% to R1 304 million, driven by construction of 66 additional towers and eight new in-building coverage solutions sites.

The company says it has received several offers from potential buyers of its towers and it is in the process of making the final decision.

“Swiftnet successfully tested the technical capability of its power-as-a-service solution (PaaS). This will help curb the impact of load-shedding on our operations and enable us to offer PaaS solutions as a value-added commercial offering, making alternative power available to customers struggling with power outages,” Taukobong says.

The telephony group yesterday confirmed receiving an unsolicited offer to acquire a controlling stake in the company, from a consortium led by its former group CEO Sipho Maseko.