Tuesday, 14 June 2022 10:27

Telkom revenue drops as it warns of slowdown in mobile growth.

By Lehlohonolo Lehana.

Telkom on Tuesday (14 June) published its annual results for the year ended March 2022, showing a marginal decline in revenue. The group cited a sluggish economy, global supply chain challenges, and chip shortages for the slip.

It said that the impact of the post-pandemic recovery is still evident in the challenging performance of small and medium businesses.

The telecoms company recorded revenue of R42.76 billion, 1.1% lower than in 2021. Profit also decreased from R2.6 billion to R2.4 billion.

Telkom summarised its group salient features as follows:

EBITDA down 0.5%, with margin expanded to 27.9%

HEPS and BEPS up 2.5% and 1.4%, respectively

Active mobile subscribers up 10.5% to 16.9 million

Mobile broadband customers at 10.7 million

Homes passed with fibre up 52.7%

Fibre-to-the-home connectivity rate at 46.3%

Revenue was offset by the decline in the fixed and IT businesses which remain under pressure due to the challenging operating environment and a decline in the fixed business as customers migrate to modern technologies such as fibre and LTE, Telkom said.

Openserve continued with its growth trajectory in the fibre market increasing homes passed with fibre by 52.7% and homes connected with fibre by 38.4%. "This is in line with its strategy to accelerate the fibre to the home (FTTH) footprint while simultaneously focusing on connecting homes."

Telkom said its mobile revenue growth of 6.3% was achieved against the backdrop of an intensely competitive landscape and challenging economic environment. "As the overall macro-economic constraints materialise, the pre-paid surge has slowed as the share of wallet spend has plateaued."

The group grew its prepaid customer base by 12% to 14.3 million with ARPU normalising to pre-Covid-19 levels. In the postpaid market, the post-paid base increased by 3.4% to 2.7 million and high levels of ARPUs were maintained at R212.

Going forward, the group said it expects Telkom Mobile to grow in line with its industry peers. "In addition to the mobile business, we expect Openserve to start growing in the next financial years supporting topline growth.

"Given the slowdown in growth in the mobile business and continuous decline in the legacy business, we expect Group revenue to grow at mid-single digit over the medium term. Our sustainable cost management is also expected to deliver mid-single digit EBITDA growth over the same period."

Telkom said it is in year two of a three year dividend suspension period. “In the current year, acquisition of spectrum took priority in line with the capital allocation framework principles of prioritising growth,"it said.