Telkom says it will spend between 15% and 18% of its revenue on its network in the next financial year as it focuses on long-term evolution (LTE) and fibre. Telkom expects its top line to stabilise next year after net revenue gained 3.1% to R26 billion.
The company, which has been moving more cautiously on capital spending, placed 16.3% of revenue - R5.2 billion - in the ground in the year to March. This is less than what rivals such as MTN and Vodacom are spending, but ahead of Cell C's plans to invest R2.2 billion this year.
CFO Deon Fredericks says the company will continue to follow a measured approach and make sure its investments are efficient. He says capital intensity will increase slightly this year as the telco focuses more on next-generation broadband technologies.
Telkom now has a negligible debt level, having paid off 93% of what it owed during the year, leaving it with just R151 million outstanding. Despite its low gearing, Fredericks says the company will not increase debt to roll out infrastructure unless there is a proven business case.
Fredericks notes Telkom will only roll out fibre and LTE, and LTE-Advanced, where it can be monetised as the company does not want to end up with assets that are not carrying any data and then need to be written down.
Telkom has been down that road before and burnt its fingers, he notes. Fredericks adds the company's investments will also have to fit in with its strategy.
During the year, Telkom spent R481 million on capital for its mobile arm, R1.5 billion on converting access networks to IP for its next-generation network, and R3.2 billion maintaining and enhancing existing telecoms and IT networks.
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