Telkom reports 7% revenue jump

By Damaria Senne for Telkom
Johannesburg, 13 Nov 2006

Telkom delivered a "solid" performance across all business segments for the six-month period ending 30 September, with group operating revenue up 7.3%, to R25.147 billion, and operating profit up 0.8%, to R7.685 billion.

According to a media statement, headline earnings increased 10.6%, to 874.7c per share, while basic earnings per share increased 7.5%, to 868.1c per share.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was down 2%, at R10.2 billion, while the operating margin dropped to 40.7%, from 44.5%, decreasing mainly due to an increase in employee expenses, while profit attributable to Telkom equity holders increased 4.9%, to R4.5 billion, the statement adds.

This is, however, a slowdown from the corresponding period last year, which saw Telkom's group operating revenue grow 9.9% (from R21.338 billion to R23.456 billion), operating profit up 37.3% and basic earnings per share increase 46.3%, to 792.7c per share.

Fixed-line business

Telkom CEO Papi Molotsane says fixed-line revenue increased 0.7%, despite tariff reductions across Telkom's product range and the loss of dial-up minutes due to ADSL roll-out.

Molotsane attributes the increase in fixed-line revenue to the company's strong focus on growing its annuity revenue streams and increasing the contribution of its data services.

He adds that Telkom had a 41% increase in capital expenditure during the period, which is indicative of the operator's commitment to remain competitive.

"It is imperative that we are able to take our customers into the future ICT landscape," he says.

Mobile business

Molotsane adds that the mobile business, through its 50% shareholding in Vodacom, also delivered an excellent performance, increasing its market share to 59%. Vodacom's South African mobile subscribers increased 34.7% during the six months to 30 September.

Despite a 21.3% increase in mobile expenditure, strong customer growth and continued efficiencies in the mobile business resulted in a slight EBITDA margin decrease to 33.8% against a 15.6% decline in average revenue per user, Telkom says in a statement.

Data revenue

Telkom's data revenue increased 13.5%, with strong growth in all data revenue categories, with ADSL subscribers increasing to 190 172 by the end of the reporting period.

Telkom is confident of achieving ADSL penetration of 15% to 20% of fixed access lines by 2010. To reduce installation time and enhance customer satisfaction, the self-install option is close to completion, it says.