Fixed-line operator Telkom this morning reported operating revenue from continuing operations, which strips out Multi-Links, down 3.2% ‑ to R16.4 billion - in the first six months of the year.
The company, which had a challenging first half to September, reported operating profit 16.7% lower, at R4.4 billion, while headline earnings per share declined 35.5%, to 191.7c. Its mobile arm, 8ta, reported a R1.158 billion loss, a 464.9% increase year-on-year.
CEO Nombulelo “Pinky” Moholi says in a statement to shareholders that “the six months under review have been very challenging”.
Moholi adds: “The traditional fixed-line market is shrinking as fixed-line voice moves to mobile and into less profitable data revenue streams, and as price competition intensifies particularly in the data market.”
Telkom reported higher operating costs, 8.2% up to R15.4 billion, mostly as a result of the R445 million impairment of iWayAfrica, higher depreciation due to its ongoing investment in the network and start-up costs of 8ta.
“Our results paint a tough picture of current operations. It is, therefore, imperative that we move into select adjacent markets to grow our revenue streams,” says Moholi.
Telkom says fixed-line voice revenue is under pressure due to mobile substitution, lower interconnect revenue, competition and increased use of voice over IP. Total fixed-line revenue declined 3.9%, to R15.345 billion.
Telkom says it needs to “provide enhanced value propositions” through ICT services and higher bandwidths. The company also must “maximise” performance of its current offerings and increase fixed-to-mobile convergence.
“We are transforming our network to allow us to move further into the mobile and select value-added ICT markets,” says Moholi. She adds full convergence, an aggressive move into the broadband arena, and improving performance of the mobile business “will be the hallmarks of the successful execution of our strategy”.
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