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TeleMasters boosts profit

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 23 Dec 2014

In the first quarter of the year, to September, TeleMasters has reported flat year-on-year revenue growth, but has bolstered its bottom line from R1 million to R1.2 million.

Its revenue came in slightly lower at R25 million. The group says this is on par with its previous period and shows a "major increase in revenue attributable to our Digital Direct technology".

TeleMasters has been migrating its base to its Digital Direct offering, because least cost routing became unsustainable when the Independent Communications Authority of SA's (ICASA) first round of prescribed lower termination rates started to take effect in 2010.

The listed company says the newer technology has "produced the anticipated and promised increase in gross margin with an increase in the gross profit percentage from 24% to 33%".

TeleMasters used the additional margin to increase its sales staff as well as grow its technical support staff. By the end of the previous financial year, it had grown sales staff four times to boost uptake of Digital Direct.

The group says the increase in staff is in line with its strategy to "aggressively" increase its market share once it was satisfied that its technology and service offering "delivers the best quality and reliable telephony solution of its type in the country".

The increase in its salaries bill accounts for the major increase in operating costs when compared with the previous period. Earnings per share gained 17% to 2.81 cents per share up from the prior period's 2.40 cents per share.

Cash generated from operations also improved, growing from R277 178 to R4.2 million quarter-on-quarter, a 15-times improvement. "Our liquidity accordingly remains positive," it says.

TeleMasters notes, however, that as its client base continues to expand, it will need to constantly fund additions to its assets. In the current period, its capital expenditure grew to almost R1 million compared with R74 173 in the previous quarter.

"This capital investment will contribute to continued revenue growth in coming years." It notes its long-term borrowings remain low.

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