Telkom achieved strong quarterly financial results for the three months ended 30 June in “weak economic conditions and a challenging trading environment”.
Group revenue grew within guidance and advanced by 3.9% to R10.9 billion year-on-year (YOY) driven by growth in demand for next-generation network (NGN) offerings.
In a statement, the firm says key contributors to strong NGN growth include a mobile service revenue increase of 9.5% and fixed data NGN revenue growth of 7.1%, while information technology revenue grew 10.3%.
“We saw continued momentum in demand for data traffic and mobile, with fixed traffic growing 25.8% and 33%, respectively, YOY,” says Serame Taukobong, Telkom group CEO.
“Our mobile subscribers advanced by 14.6% and surpassed the 21 million mark, with a stable prepaid average revenue per user (ARPU) and postpaid base, while homes connected with fibre grew by strong double digits, at 19.5% YOY.”
Taukobong notes these key performance drivers propelled NGN revenue growth, supported by reduced direct costs resulting from ongoing cost optimisation projects.
This led to earnings before interest, taxes, depreciation and amortisation (EBITDA) growth of 24.1%, advancing EBITDA to R2.7 billion, with the group EBITDA margin improving to 25.5%, also benefiting from a stabilised electricity supply in South Africa during the quarter, he adds.
Telkom Consumer recorded a 2.6% increase in revenue to R6.5 billion, in a challenging competitive landscape, says the firm.
It points out that the overall performance was on the back of a data-centric approach stemming from the mobile business and the expansion of fibre offerings.
Mobile surge
Mobile business revenue growth was propelled by a 9.5% increase in external mobile service revenue to R4.9 billion, with total external revenue increasing by 5.3% to R5.7 billion.
“This growth was driven by our continuous delivery of innovative and value-oriented offerings, which significantly stimulated data consumption. Increasingly, consumers sought value on our personalised pricing platform, Mo’Nice, which now accounts for 35.4% of total service revenue,” Taukobong notes.
“The driving force behind our performance stems from the strengthening of our subscriber base, which rose by 14.6% to 21.2 million total mobile subscribers, characterised by a blended ARPU of R81 (Q1 FY2024: R83). Our postpaid subscriber base remains steady at approximately three million, with an ARPU of R183 (Q1 FY2024: R183), while the prepaid segment experienced an increase of 17.4% to 18.2 million subscribers with an ARPU of R62 (Q1 FY2024: R63).”
According to Telkom, the consumer business experienced a 25.8% surge in mobile data traffic, amounting to 414 petabytes.
It explains this growth was bolstered by a 15.1% increase in mobile broadband subscribers, to 13.5 million (comprising 63.5% of total subscribers).
“As a result, our mobile data revenue had a solid growth of 12.9%. We experienced an 8% increase in the fibre subscriber base, supported by a 12.5% ARPU growth, resulting in revenue from fibre growing by 25.1%,” the CEO adds.
Telkom Consumer EBITDA increased by 28.4% to reach R1.2 billion, on the back of solid revenue growth and prudent cost containment initiatives.
Taukobong explains that these drivers led to an increase in the EBITDA margin of 3.6 ppts. Mobile EBITDA in turn grew by 35.7% to R1.5 billion on the back of strong revenue growth, particularly in the prepaid domain and reduced load-shedding costs. As a result, the mobile EBITDA margin grew by six ppts YOY.
“We are still experiencing robust growth of our ‘beyond connectivity’ services, with revenue holding at R407.5 million. A significant contributor to this growth is the airtime advance product, which increased 32.3% YOY and now represents 32.9% of our total recharges.
“Capital expenditure allowed for enhanced capacity and coverage across our network of 7 778 base stations, underscoring our commitment to expand and strengthen mobile network infrastructure.”
Connect-led strategy
Openserve’s NGN products and services maintained their upward trajectory, showing continued growth, with fixed data NGN revenue increasing by 7.1% YOY, says the firm.
As Openserve strives to differentiate its product portfolio and strengthen its external wholesale channels, its contribution to Telkom’s overall revenue grew by 9.2% to R1.17 billion, it adds.
These channels experienced strong NGN revenue growth of 9% YOY, resulting in NGN connectivity now representing more than 94% of Openserve’s overall external wholesale revenue.
“While we see ongoing growth in NGN services, the overall revenue declined by 2.4% to R3 billion YOY, primarily driven by a decline of 28.4% (R188 million) in voice and legacy revenue,” Taukobong reveals.
Bolstered by the strategic imperative of building an extensive network, homes passed increased by 13.4% to 1 256 603.
Openserve’s connect-led strategy continued to deliver positive results, with an increase of 19.5% in the number of homes connected to 615 430, resulting in a connectivity rate of 49%.
“With the increase in demand for connectivity and high-speed broadband, we continued to see growth in data consumption, as it advanced by 33% to 681 petabytes for the quarter. We are confident the capital investment to modernise and transform our network will continue enabling us to connect more homes, as well as cater for higher bandwidth requirements from our customers,” Taukobong notes.
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