Telkom Mobile and Openserve drive group revenue growth

Telkom published a trading update for the three months ended 31 December 2023, revealing that its revenue grew from the same period in 2022.

The partially state-owned telecoms company recorded revenue of R11.30 billion, 2.0% higher than the R11.08 billion reported during the prior quarter.

“Group revenue increased by 2.0% to R11 304 million driven by compelling data-connectivity propositions from our mobile and fixed networks,” it said.

“Higher recharges by prepaid mobile subscribers, ongoing rollout of fibre network to homes and enterprises by Openserve drove revenue growth.”

At the same time, its earnings before interest, taxes, depreciation, and amortisation (EBITDA) remained stable at R2.48 billion.

“However, the resulting EBITDA margin at 21.9% decreased,” Telkom added.

It said the margin decrease was largely affected by the product mix at BCX, higher expected credit losses, and load-shedding-related costs.

“While load-shedding days reduced to 63 days from 89 days year-on-year (“y-o-y”), the cost of load-shedding remains in the operating cost base,” Telkom said.

It added that it continually works to mitigate the risk and impact of load-shedding on its operations and has made capital expenditure investments in alternative energy sources, including solar power and battery storage.

This has helped to increase network availability for its mobile customers from 89% to 94%.

The company said its mobile and fixed-data segments showed impressive growth, contributing to its group revenue growth:

• Mobile revenue up 4.80% to R6 billion.
• Mobile service revenue up 7.1%.
• Mobile EBITDA up 3.50% to R1.2 billion.
• Openserve revenue up 6.2%.
• Openserve EBITDA up 7.0% to R1 billion.

The group said Swiftnet and its IT business reported strong revenue growth, while BCX was slightly down for the quarter at 0.7% less than in the same period in 2022.

Serame Taukobong, Telkom’s CEO, said the performance is against a solid comparative prior quarter.

“Compelling value propositions drove next generation (“NGN”) revenue growth and operating earnings, thereby affirming our data-led strategy,” he said.

“Our cost-reduction initiatives also contributed to improved operating EBITDA as they partially offset inflationary increases, increased bad debt provisions and the added cost of load-shedding.”

“Telkom Consumer and Openserve made impressive progress and advanced operating earnings by 20.6% and 7.0% respectively,” Taukobong added.

He explained that the group’s EBITDA remained stable despite continuing inflationary pressures on retail consumers and enterprises in South Africa.