JSE-listed telecommunications firm Telkom has reported group revenue surge of 1.6% to R43 billion.
The company, led by CEO Serame Taukobong, today announced its group annual financial results for the year ended 31 March.
“Telkom made good progress in the 2024 financial year, delivering a stronger operational performance and improved financial results, as the leading infrastructure company at the heart of South Africa’s digital connectivity,” it says in a statement.
It notes that group performance for the year improved against a challenging economic backdrop in South Africa.
“Our data-led strategy delivered ahead of industry trends as we grew mobile service revenue by 6.8% and surpassed 20 million mobile subscribers.”
Telkom delivered improved financial results despite inflationary pressures and the added operating cost resulting from power outages in South Africa.
The firm explains that increased operating margins were driven by continued demand for and growth of next-generation offerings.
Stronger operational performance, along with cost-optimisation initiatives, contributed to normalised earnings before interest, taxes, depreciation and amortisation (EBITDA) growth of 5.2% to R10 billion, it notes.
Including non-recurring restructuring costs in the prior year, reported EBITDA advanced by 18.4%.
Total headline earnings per share and basic earnings per share increased by more than 100% to 376 cents and 385.5 cents, respectively.
Openserve’s fibre connectivity rate advanced to 48.5% as Telkom prioritised monetising its fixed network and passed more than 1.2 million homes with fibre.
The firm states that subsidiary BCX made good strides in growing its IT service revenue, and Swiftnet's tower rollout programme and tenant growth further contributed to revenue growth and margin expansion for the Telkom Group.
Network resilience investments
“We invested R6.1 billion towards network resilience, expanding our mobile network, modernising our fixed network infrastructure and fortifying our skills and capabilities for information and communication technology managed services,” says Telkom.
This investment included spectrum, which is already deployed to further improve offerings and service levels to retail, enterprise and wholesale customers, it notes.
“We made excellent progress in delivering on our strategic imperative to unlock value through the proposed disposal of Swiftnet for R6.75 billion. The transaction was presented and approved by shareholders on 24 May 2024.
“This approval indicates our shareholders’ support for management to explore further opportunities that enhance shareholder value.”
According to the company, from a loss position in the prior year, profit for the year also increased by more than 100% to R1.9 billion, boosted by the non-recurrence of once-off restructuring costs and lower depreciation, while higher interest rates increased net finance costs compared to the prior year.
“We put great effort into improving cash generated from operations, which increased by more than R4 billion, excluding restructuring costs. Better-than-expected positive free cash flow of R424 million was driven by improved operational performance and our measured approach towards capital expenditure (capex) this year,” it says.
The firm points out that Telkom Consumer remained resilient in delivering broadband solutions across the mobile and fibre segments, increasing external revenue by 2.2% to R26.1 billion.
Total external revenue from mobile operations increased by 4.5% to R22.5 billion, driven by 6.8% growth in mobile service revenue.
It explains that mobile service revenue growth was primarily due to mobile data revenue, which increased by 10.6%, contributing R14.3 billion to total mobile revenue.
Cost structure optimisation
“As we focused on sustainable growth, we continued to refine our operational efficiencies and optimise cost structures. EBITDA grew by 24.2% to R4 billion as a result, and the EBITDA margin expanded to 15.5% (+2.8 ppts). The mobile business also improved its EBITDA margin to 22.2% (+1.7 ppts), despite the adverse effects of load-shedding and higher expected credit losses due to economic pressure on consumers.
“In a highly-competitive market, we grew our mobile subscriber base by 11.9% to 20.4 million, with a blended average revenue per user (ARPU) of R84 (FY2023: R86). Our prepaid base expanded by 14.3%, to reach 17.5 million subscribers.”
According to the telco, this was fuelled by the acquisition of higher-quality connections and improved recharging behaviour and ARPUs within the existing customer base. The postpaid base remained relatively stable at 2.9 million subscribers.
Mobile broadband subscribers increased by 9.5% to 12.7 million, representing 62.3% of the firm’s total mobile base now using wireless broadband.
“We invested R2.6 billion in mobile capex, including R972 million for spectrum. This enabled us to expand our network coverage by 2.5%, grow our presence to 7 738 sites, and maintain network resilience by replacing over 5 688 lithium-ion backup batteries and repairing more than 1 606 sites.
“Our 4G device adoption rate exceeded 92%, informed by our data-led strategy. Currently, 51% of data traffic is routed through our 4.5G network (primarily serving fixed wireless access) and 46% through our 4G network (predominantly catering to mobile data services). We have deployed 465 active 5G sites since launching our 5G services in 2022.”
Telkom reveals that a revised dividend policy has been approved by the board, noting the new policy will be based on available free cash flow, while prioritising a strong balance sheet and future capex requirements.
The policy proposes a dividend payout range of 30% to 40% of free cash flow after taking into account capex investments. The dividend will be declared and paid on an annual basis, with a resulting dividend yield comparable with local telecommunications companies.
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