Mobile saves Telkom as landlines ring off

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Mobile saves Telkom as landlines ring off

Published Date: 2018-11-14 | Source: Stephen Gunnion | Author: Stephen Gunnion

Mobile saves Telkom as landlines ring off

The telecoms operator grew mobile customers by 50% in the six months to end-September but BCX weighed on earnings.

Telkom is ringing up sales to mobile customers as revenue from landline customers starts to dwindle. The telecoms operator grew its mobile customer base by 50% to 6.5 million in the six months to end-September, using broadband and cheap data-led products to attract new users.

However, although new revenue streams are compensating for the decline in traditional products they are not as profitable. It's trying to stimulate more data traffic to preserve its margins.

As well as its growing mobile business, Telkom says its Openserve and Gyro businesses also contributed positively to first-half results. Openserve, a wholesale infrastructure connectivity provider, marginally increased its revenue, despite the decline in traditional revenue. Gyro, which manages masts and towers, property development and property management services, continued to grow external revenue and the mast and tower portfolio tenancy ratio.

On the downside, enterprise business BCX was negatively affected by the weak economy as well as the decline in voice revenue. The group said large corporates reduced or deferred spending, while public sector ICT spend remained subdued.

Operating revenue rose 5.2% to R10.8 billion as a 54% rise in Mobile service revenue to R3.58 billion compensated for a 7% decline in Fixed service revenue to R10.8 billion. Information technology revenue improved by 3.3% to R3.77 billion. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 2.9% to R5.32 billion but headline earnings per share (HEPS) fell 3.3% to 288c. Adjusted HEPS, which exclude the impact of voluntary early retirement and severance packages of R282 million and the related tax impact of R80 million, rose 10.3% to 328.6c. It's reduced its interim dividend y 5.1% to 112.14c per share.

Telkom said high-demand spectrum was likely to be licensed within the next 12 to 18 months. However, it said the 700 MHz and 800 MHz bands would only be commercially available after completion of digital migration and restacking. It also expects the Electronic Communication Amendment Bill to be passed within the next few months.

Its shares closed 5.1% lower at R52.34 yesterday.





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