Telkom’s Results Shows Gains Amid Fixed-Line Decline

Telkom has posted strong financial results for the fiscal year 2024, attributed to the success of its next-generation services and strategic cost-cutting measures. The company reported a 5.2% increase in normalized earnings before interest, taxes, depreciation, and amortization (EBITDA), reaching R10 billion. This growth is a testament to Telkom’s enhanced operational performance and effective cost management strategies.

Adjusted headline earnings per share and adjusted basic earnings per share saw impressive increases of 201.3% and 442.8%, rising to 376 cents and 385.5 cents, respectively. However, this financial success was somewhat overshadowed by a loss of around 184,000 fixed-line subscribers over the year.

The fixed-access lines, which include copper voice and broadband packages, experienced a significant drop of 23.2%, from 793,000 in March 2023 to 609,000 in March 2024. This decline, representing nearly a quarter of Telkom’s fixed-access customer base, underscores the challenges posed by the evolving telecommunications landscape. Once dominant in the fixed copper voice and broadband market, Telkom now faces stiff competition from internet-based mobile voice services and fibre network operators (FNOs).

Telkom’s fibre services demonstrated robust growth

Despite the decline in fixed-line subscribers, Telkom’s fibre services demonstrated robust growth, providing some relief. Openserve, Telkom’s wholesale division, reported a 7.4% increase in revenue from next-generation, data-led products and services, which now constitute 76.4% of its total revenue. As the leading wholesale infrastructure connectivity provider in South Africa, Openserve saw a 16.1% growth in next-generation broadband connectivity (fibre to the home). Additionally, the enterprise and carrier segments grew by 4.8% and 2.5%, respectively.

Telkom Consumer showed solid performance as well, with external revenue rising by 2.2% to R26.1 billion. Revenue from mobile operations increased by 4.5% to R22.6 billion, driven by a 6.8% rise in mobile service revenue. Despite a competitive market, Telkom Consumer expanded its mobile subscriber base by 11.9% to 20.4 million. Mobile broadband subscribers also saw a 9.5% increase, reaching 12.7 million, which now makes up 62.3% of the total mobile base.

BCX, Telkom’s IT services division, managed to keep gross revenue stable at R14.2 billion despite facing intense market competition. However, reported revenue slightly declined by 2.3% to R12.9 billion due to an accounting revision for agent versus principal contracts. On a positive note, gross IT revenue grew by 11.4% to R8.5 billion, driven by new product deals, software contract renewals, clearing backlogs in integration services from the previous year, and record cross-border sales.

Gyro, Telkom’s property management division, focused on optimizing the Group’s property portfolio for core operational purposes and enhancing energy efficiency. The sale of properties no longer needed generated R92 million.

Group CEO, Taukobong, emphasized that the Group has established a solid foundation for growth as a focused InfraCo, leveraging its mobile and fixed networks along with its ICT capabilities. The strategy moving forward includes efficient investments in mobile and fibre network businesses, while expanding ICT capabilities centered around data centers.

Telkom’s strategic initiatives and financial resilience highlight its commitment to navigating the dynamic telecommunications landscape and securing a strong position for future growth.

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