Telkom Mobile’s earnings remained flat despite its subscriber base growing to 18.3 million users as load-shedding and bad debt provisions cost the business R163 million and R268 million, respectively.
This was revealed in Telkom’s interim results for the first six months of its current financial year.
The company’s profit and earnings for the first half of the 2024 financial year grew by over 50%, as the company benefitted from lower depreciation charges and growth in EBITDA.
Its operating profit increased by 58.2% to R2.21 billion, while profit for the period increased by 52.3% to R976 million.
This was driven by growth in mobile traffic, the monetisation of the rollout of its fibre infrastructure and the growth of the IT business.
However, the growth of its mobile business was partially offset due to the increased cost of load-shedding and impairment of contract assets, resulting in the company raising bad debt provisions.
Telkom’s Mobile subscriber base grew by 1.5% to 18.3 million users, with an average revenue per user (ARPU) of R85 from R88 in the same period last year.
Most of the company’s subscriber base is pre-paid customers, making up 15.3 million of the total users and with an ARPU of only R64.
In contrast, the post-paid customer base of 3 million users had an ARPU of R182.
The growth in subscribers was offset by declining ARPU, which resulted in the Mobile business’ earnings remaining flat at R2.46 billion and a margin of 22.2%.
Telkom said the mobile business suffered from several headwinds, with load-shedding and increased bad debt provisions impacting its financial performance.
Load-shedding cost the mobile business R163 million in the first six months of the current financial year, while bad debt provisions cost it R268 million.
Load-shedding forced the company to replace more than 3,052 batteries at various South African sites. Sixty-one sites were subject to vandalism.
The company said the increase in bad debt provisions stemmed from an “escalated allocation for impaired debt, driven by ongoing consumer stress”.
Demand for data remained elevated, with data traffic increasing by 22.9% to 676 petabytes.
Telkom invested R1.6 billion into its mobile network to satisfy this demand, including R972 million allocated towards spectrum.
The financial performance of Telkom’s Mobile business is summarised in the table below.
|Telkom Mobile||H1 2022||H1 2023||Change|
|Operating revenue||R10.71 billion||R11.09 billion||3.54%|
|Other income||R173 million||R224 million||29.48%|
|Operating expenses||R4.09 billion||R4.49 billion||9.84%|
|Capex||R1.9 billion||R1.6 billion||-14.8%|
|EBITDA||R2.41 billion||R4.46 billion||1.87%|