Telkom delivered a strong first-quarter performance, with its data-led strategy driving revenue growth across its mobile, fibre and ICT businesses.
In a trading update for the first quarter ended 30 June, the JSE-listed firm says group data revenue increased 8.8% to R6.9 billion, accounting for 62.4% of total revenue, supported by an 11.4% rise in mobile data revenue and 4% growth in fibre-related data revenue.
Mobile service revenue grew 6.4%, driven by a 9.1% increase in prepaid service revenue, while the mobile subscriber base expanded 6.1% to 25.3 million. Data subscribers rose 15.5% to 19.8 million.
Openserve continued its positive momentum, with revenue increasing 5.6%, while BCX reported stable IT services revenue growth of 0.3% despite a challenging market. Within BCX, cyber security revenue surged 36.6% and cloud services grew 11.8%.
Telkom also reported an expanded earnings before interest, taxes, depreciation and amortisation (EBITDA) margin of 27.7%, supported by double-digit EBITDA growth.
Openserve, mobile boom
Serame Taukobong, group chief executive officer of Telkom, says: “We commenced the new financial year with strong data-led growth supported by mobile and Openserve.
He notes that mobile and Openserve delivered solid revenue and EBITDA growth, as mobile service revenue re-accelerated compared to the preceding quarter (Q4 FY2026).
“We continued with our OneTelkom approach. Furthermore, our cost discipline initiatives contributed to a solid group EBITDA growth and the EBITDA margin expanded.”
Taukobong notes that BCX continued to experience revenue pressure, mainly as a result of revenue decrease in converged communications, as well as IT hardware and software sales.
“As expected, subdued performance in BCX remains, while the new management continues the reshaping of the business.”
He points out that in July, Openserve launched its own internet service provider (ISP) to monetise its existing infrastructure and improve the connectivity rate.
The results show that group revenue increased by 2.6% for the quarter, driven by robust group data revenue growth of 8.8%.
Data revenue contribution to total group revenue improved to 62.4% (Q1 FY2026: 58.8%). Fibre-related data revenue for the group increased by 4% to R2.095 billion, while mobile data revenue rose by 11.4%.
Data-led revenue (mobile and fibre-related data revenue) increased by R561 million, offsetting a R124 million decline in traditional fixed revenue, as BCX continued to experience revenue strain in converged communications.
Group EBITDA grew by 10%, resulting in group EBITDA margin expanding by 1.8 ppts to 27.7% for the quarter.
“Our drive for cost-efficiencies resulted in total expenses declining by 1.9% for the quarter, mainly due to a decrease in roaming costs in mobile, maintenance costs and impairment of receivables,” Taukobong says.
Capital expenditure of R888 million was 19.4% lower for the quarter, primarily attributable to the timing of multi-year projects in Openserve, as Q1 FY2026 included a higher level of network project completions and associated capital recognition.
“We mainly invested in our mobile business and Openserve, while a portion of the capex was directed towards IT solutions relating to the transformation programme for business support systems (BSS). Capex intensity was at 8% for the period and we will ramp-up the spend for the remainder of the year.”
Network expansion
In the mobile business, R421 million was invested primarily to expand network capacity and upgrade base stations.
As a result, Taukobong points out that 84 sites were added during the quarter, increasing the network footprint of mobile to 8 504 base stations.
The business also invested in IT transformation and the upgrade of BSS and digital platforms. Openserve invested R379 million in capex during the period to modernise and expand its network, passing 26 541 homes and connecting 26 023 for the quarter.
Service revenue for the mobile business grew by 6.4% supported by prepaid service revenue growth of 9.1%.
According to Taukobong, the execution of the regional strategy resulted in revenue from non-metro regions increasing in the double digits.
He adds that mobile data traffic increased 19.6%, while data subscribers grew to now represent 78.4% of the total base. Prepaid subscribers rose by 7.1% to 22.3 million, with the prepaid average revenue per user broadly stable at R59 year-on-year. The EBITDA margin of mobile remained strong, expanding by 2.7 ppts to 29.1%.
Stable IT services revenue
Openserve overall revenue increased by 5.6% due to fibre-related data revenue growth, while external revenue grew by 18.2%.
Taukobong explains that the increase in revenue and EBITDA growing by 6.7% translated in the EBITDA margin expanding to 33.2%.
“Openserve maintained its connectivity rate which improved to 53.9% driven by the proven connect-led strategy of the business.
“Revenue in BCX declined by 10.9%, with IT services revenue stable, as cyber security and cloud services recorded robust growth. EBITDA increased 2.6% driven by improved margins in the IT services segment, lower impairment of receivables and disciplined cost management. This led to the EBITDA margin expanding by 1.0 ppts to 7.5%.
“During the quarter, we sold 100 properties with a sales value of R200 million and 105 properties are in conveyancing, valued at R264 million.”
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