Telkom will be able to generate sufficient cash over the next two to three years to fund the rollout of its next-generation network, it says.
In the year to March, Telkom spent R5.7 billion on capital expenditure, a 20% increase on last year's R4.783 million. The amount is 17.7% of its operating revenue, up from 14.5% in 2012.
Telkom has the biggest fibre footprint in SA, with 147 000km, 80% of all fibre in the ground, says CEO Sipho Maseko. However, the company is facing dwindling voice revenue and has pegged data as the solution to offset this, although data will have to grow in double digits.
The group invested in its next-generation network last year from cash reserves and will continue to do so, says Maseko. Telkom notes the upgrade will lead to speeds of 40Mbps and reduced fault rates.
Telkom's operations generated R7.5 billion from operating activities and ended the year with cash and cash equivalents of R2.8 billion.
Telkom's new all-IP network will enable true converged offerings and is a commercially-led national broadband rollout. Maseko says Telkom aims to monetise the new network "fast" and it will lead to a "step change" in data.
In the next two years, Telkom expects to spend north of R10 billion on the network. It initially said the rollout would cost between R18 billion and R21 billion over three years.
Big push
Baseline capital expenditure of R2 billion mostly went into the deployment of technologies to support the growing data services business, links to the mobile cellular operators and expenditure for access line deployment in selected high-growth commercial and business areas.
Expenditure on network evolution of R1.2 billion was mainly for the initial phase rollout of the next-generation network programme to modernise the legacy voice network, provide high-speed ADSL service in selected areas, and address the associated operational and business support systems.
Telkom also spent R1.5 billion on its mobile arm. Currently, data accounts for 33.2% of its revenue, a 5.5 percentage point increase. Voice, which dropped 5.7 percentage points, accounts for 56.7%, says CFO Jacques Schindeh"utte.
Telkom's operating revenue was R32.5 million, a 1.7% decline on last year as fixed voice again declined. Schindeh"utte says the future is data, but Telkom wants it to grow in double figures.
Telkom currently has 870 505 ADSL customers and a total fixed-line base of 3.8 million, down from just below four million a year ago.
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