Telkom said it produced strong results for the three months to June 30 in weak economic conditions, with group revenue within guidance and up by 3.9% to R10.91 billion.
First quarter revenue growth was driven by growth in demand for next generation (NGN) offerings. Key contributors to NGN growth include Mobile service revenue growth of 9.5%; fixed-data NGN revenue growth of 7.1%; and information technology revenue growth of 10.3%, the group said in a quarterly update yesterday.
“Telkom had a good start to the financial year with pleasing performance on the top line benefiting from our data-led strategy and value propositions. Our NGN revenue streams continued their positive momentum. NGN revenues now comprise 80.7% of group revenue,” CEO Serame Taukobong said.
The mobile subscribers number advanced by 14.6% and surpassed the 21 million mark, while homes connected with fibre grew strongly by 19.5%.
These performance drivers propelled NGN revenue growth, supported by reduced direct costs resulting from ongoing cost optimisation projects. This led to Ebitda growth of 24.1%, advancing Ebitda to R2.78bn.
The group’s Ebitda margin improved to 25.5%, with it also benefiting from a stable electricity supply.
Mobile Ebitda increased by 35.7%. Openserve fixed-data NGN revenue was up 7.1%. Its Ebitda was up 16.8% to R1.02bn. The group claimed a market-leading fibre-to-the-home (FTTH) connectivity rate of 49%.
BCX’s revenue was up 2.4% to R3.18bn; IT revenue increased 7.1%; Swiftnet revenue was up 5.2%; while some R161m was realised from non-core property disposals.
Ebitda growth for the first quarter was expected to moderate for the full year, driven by a higher base from the second quarter to the end of the 2024 financial year.
NGN broadband offerings, enabled by capital investment in mobile and fibre networks, had positioned Telkom as “the best value mobile network” while the connect-led strategy for the fibre network further improved the market-leading home-connection rate to 49% for the quarter, Taukobong said.
“These capex investments give our networks the capacity to accommodate and handle high data-traffic demands from our retail and enterprise customers on already existing mobile and fibre infrastructure,” he said.
The Ebitda margin improvement by 2.3 percentage points was driven by top line growth and cost management, despite inflation causing upwards pressure on costs, as cost optimisation initiatives yield positive results.
“We continue to focus on cost containment while simultaneously monetising our networks by adding to our mobile sites and expanding our fibre footprint where these investments contribute to top line growth and overall profitability,” Taukobong said.
Mobile business revenue growth was propelled by a 9.5% increase in external mobile service revenue to R4.99bn, with total external revenue increasing by 5.3% to R5.74bn.
“This growth was driven by our continuous delivery of innovative and value-oriented offerings,” he said.
Taukobong said the planned rollout of Power-as-a-Service (PaaS) was in execution phase and on track, with 141 PaaS solutions built and connected to customers during the first quarter of the financial year.
“PaaS has started to generate revenue on sites connected to customers. We expect this service to contribute significantly to revenue growth in the current financial year,” he pointed out.
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