Telkom delivers strong interim results

Fixed line operator Telkom has delivered a strong performance in the six-month period ending 30 September, CEO Papi Molotsane announced at the group`s interim results in Midrand today.

According to the interim statements, Telkom has seen a 9.9% growth from R21 338 million to R23 456 million in group operating revenues. The group has also seen a 37.3% growth in operating profit and basic earnings per share increased by 46.3% to 792.7c per share.

Telkom has enjoyed this growth as a result of strategies that continue to be implemented, Molotsane said. The dedication shown by the employees of the Telkom group also played an important role, he continued.

The fixed line operating profit has increased by 29%. This has been due to 32% growth in managed data network sites, 42% increase in total mobile customers (Vodacom`s contribution) and a 161% growth in ADSL adoption.

Independent Communications Authority of SA (ICASA) chairperson Paris Mashile asked detailed, challenging questions regarding Telkom`s strong performance. In essence, Mashile suggested that Telkom had done so well because there is an acute need for competition in the country and Telkom is a monopoly, thus having a captive audience who don`t have a choice but to purchase services from it.

While Telkom is the incumbent telecoms operator, the second national operator will bring about choice, Molotsane acknowledged, which will allow the market to have something to judge Telkom against.

A shift in the strategic direction of the company was also announced by Molotsane. He said greater focus would be placed on ensuring that consumers have a "delightful experience" in their dealings with the company.

This will be accomplished through looking at telecoms pricing to ensure elasticity, innovative bundling of services and embracing new technology such as voice over IP.

The company has developed a comprehensive strategy, he said, that deals with the issue of customer service to ensure transparency of service. Telkom will publicly make specific customer service-related promises to the consumer with timelines attached, he said.

Telkom executives spoke about the company`s expansion plans into the rest of Africa. Allaying investor concern, Molotsane said a process of due diligence will be conducted to ensure that Telkom`s level of profitability is not jeopardised.

"I assure you, if it does not make business sense, we will not do it," he said. "We cannot jeopardise the dividends that our investors are used to."

Telkom will continue with its bid into a stake of Nitel in Nigeria, as well as its joint bid with Vodacom of V-Mobile, also of Nigeria, said Kaushik Patel, chief financial officer. He pointed out that the V-Mobile bid was still uncertain; thus it made sense for Telkom to continue with its independent bid on Nitel.

It would be up to the competition board in Nigeria to decide whether Telkom can have a stake in both telecoms companies once bids have been successful, he said.

The issue of the three suspended executives has been resolved, Molotsane announced. He would not disclose what the dispute was about, nor what involved the "amicable settlement", citing employer-employee confidentiality as a reason.