Telkom Surpasses 20 Million Mobile Users and Reports Strong Annual Results

Telkom announced on Tuesday that its mobile network has reached over 20 million users for the first time, reflecting significant growth amidst a challenging economic landscape. The annual results for the fiscal year ending March 2024 highlight notable achievements across various segments, particularly in mobile service revenue and fibre business.

Mobile Network Growth

Telkom’s mobile service revenue saw a 6.8% increase, supported by the expansion of its user base and the rise in mobile data usage. The total number of mobile subscribers grew by 11.9% to 20.4 million. The company’s prepaid base expanded by 14.3% to 17.5 million subscribers, driven by higher-quality connections and improved recharging behavior. Mobile broadband subscribers also increased by 9.5% to 12.7 million, now making up 62.3% of the total mobile base. Despite these gains, the blended average revenue per user (ARPU) slightly decreased from R86 to R84.

Fibre Business Expansion

Telkom’s fibre business also showed strong performance, with a 17% increase in the number of homes passed with fibre, totaling over 1.2 million. Of these, 590,000 homes are connected, achieving a connectivity rate of 48.5%, which the company claims is the highest in the industry. Next-generation fibre now constitutes 93% of subsidiary Openserve’s external wholesale revenue. The total NGN fibre revenue grew by 7.4%, representing 76.4% of Openserve’s overall revenue of R12.5 billion.

Financial Performance

Telkom reported a 1.6% increase in group revenue to R43.2 billion, driven by the growth in mobile data and fibre connectivity revenue, which rose by 10.6% and 14.5%, respectively. However, this was partially offset by a 23.4% decrease in fixed-voice revenue, a 20.7% decrease in customer premises equipment, and a 6.8% decrease in mobile handset sales.

Group EBITDA increased by 5.2%, delivering a margin of 23.2%. Headline earnings per share surged by 201% to R3.76/share, benefiting from the absence of once-offs from the prior year. Free cash flow more than doubled to R424 million.

Investments and Capital Expenditure

Telkom’s capital expenditure for the year was R6.1 billion, focused on expanding the mobile network, modernizing the fixed-line network, and hiring staff in its IT managed services business. This investment included spectrum deployment to enhance service offerings across retail, enterprise, and wholesale customers.

BCX and Swiftnet Performance

BCX, Telkom’s IT services division, showed progress in IT service revenue, which increased by 9.9% to R7.3 billion. This was driven by new product deals, software contract renewals, and record cross-border sales. However, BCX’s overall revenue declined by 2.3% to R12.9 billion, and EBITDA fell by 28.4% to R1.3 billion, with margins slipping to 10%.

Swiftnet, Telkom’s tower infrastructure subsidiary, contributed to revenue growth and margin expansion through its tower roll-out program and tenant growth.

Future Outlook

Despite the pressure on BCX and a decline in certain revenue streams, Telkom remains optimistic about its future prospects. The company plans to resume dividend payments from the 2025 financial year. Encouragingly, the demand for next-generation network offerings, including fibre and LTE, continues to drive growth and improve operating margins.

Conclusion

Telkom’s robust performance in mobile and fibre segments highlights its resilience and strategic focus on next-generation technologies. The company’s investments in network expansion and IT services are expected to sustain its growth trajectory amidst evolving market dynamics.