Telkom earns R2 billion

By Phillip de Wet for Telkom
Johannesburg, 01 Jul 2002

Telkom has announced what it describes as "strong" results for its final year as a monopoly player and, if government gets its way, in its last year as a non-listed company.

Figures released this morning show that the company turned a profit of just under R2 billion off revenue of R34 billion for the year to end March. Just under R7 billion of that came from its 50% holding in cellular operator Vodacom.

While the core fixed-line business saw revenues grow only 4%, Vodacom grew its contribution by 25% thanks to a subscriber base which increased by a third during the year.

Telkom, on the other hand, lost 10% of its contract customers, largely due to bad debts which cost it R965 million, up more than 40% from the previous year. However, the company says the loss of subscribers was offset by a 47% growth in prepaid users with a net effect that the number of telephone users declined by only 1%.

The company`s data business performed well, with an 18% increase in fixed-line data revenue to R3.7 billion and a 25% increase in the number of ISDN data connections.

"The group is focused on expanding its wireline data offering as it is a key driver of growth," it said in a statement.

Operating cash flow of the group was up 16% to just over R11 billion with a steady EBITDA (earnings before interest, tax, depreciation and amortisation) margin of 31%. Earnings per share were up 17% to R3.44 despite the fact that total revenue increased only 8%. Headline earnings per share were up 15% to R4.15.

Telkom spent 7% less on capital during the year, with R9 billion spent mainly on the network, and gearing was down to 122% from 143% in 2001.

Continued retrenchments cost the company R373 million but allowed it to reduce its number of employees per line to 113 in the fixed-line business.

The government has said it still plans to list a portion of its majority shareholding on both the JSE and New York Stock Exchanges by February next year, despite renewed uncertainty from investors after fraud was revealed at WorldCom. At current price to earnings ratios this could net government coffers about R5 billion.

More information on Telkom`s results and its plans for the future will be available at ITWeb during the course of the afternoon.