South Africa’s Telkom lowers revenue and profit guidance

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Telkom has published its annual results for the year ended 31 March 2022, showing its revenue declined from 2021.

The telecoms company recorded revenue of R42.76 billion, 1.1% lower than the R43.22 billion it posted for its financial year ended 31 March 20221. Yearly profits increased from R2.4 billion to R2.6 billion.

Telkom blamed the performance on several factors, including a “sluggish” economy, global supply chain challenges, and chip shortages.

“The year was characterised by the prolonged effects of the Covid-19 pandemic on certain economic sectors, an intensely competitive landscape, volatile capital markets and significant regulatory developments,” Telkom stated.

“The impact of the post-pandemic recovery is still evident in the challenging performance in the small and medium businesses.”

The company said that competition was intensifying in the mobile sector, where it had to continue to innovate to protect its value proposition.

It still managed to grow mobile service revenue by 3.3% year-on-year to R17.51 billion.

However, the gains in this area were offset by a drop of 9.7% in fixed service revenue, declining from R15.12 billion to R13.65 billion.

The company’s wholesale fixed broadband division Openserve has been bleeding copper-based fixed customers over the past decade, with fibre replacing DSL as the preferred home and business connection.

Openserve infrastructure
Openserve infrastructure in Midstream Estate

Telkom said despite the decline in revenue, its underlying Group earnings before interest, tax, and deductibles (EBITDA) remained relatively flat — decreasing by 0.5% to R11.91 billion.

The company’s underlying headline earnings per share (HEPS) and basic earnings per share increased by 2.5% and 1.4%, respectively.

Telkom also reported lower capital expenditure (capex) than the year before, with R7.48 billion spent compared to R8.45 billion.

Due to spending R2.1 billion on the spectrum it acquired during Icasa’s recent high-demand spectrum auction, Telkom expects its capex to revenue ratio will reach 20% in the 2023 financial year and normalise to a sustainable capital investment level of 16-18% thereafter.

Telkom summarised its Group salient features as follows:

  • Revenue down 1.1% to R42.8 billion
  • EBITDA flat (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%

EBITDA and earnings relative changes exclude the R270 million impact of retrenchments, voluntary early retirement, voluntary severance, and the related tax impact of R76 million in the comparative year.

Main Image: EWN

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