Telkom sees slight revenue growth amidst Swiftnet sale


Telkom reported relatively flat revenue growth for the last quarter of 2023 and provided an update on its proposed sale of Swiftnet.

Telkom released a trading update for the quarter ended 31 December 2023 today, which revealed 2% revenue growth.

Group revenue increased to R11.30 billion and was driven by the company’s data-connectivity propositions from its mobile and fixed networks. 

The telecoms company said higher recharges by prepaid mobile subscribers, the ongoing rollout of fibre network to homes and enterprises by Openserve drove revenue growth.

This was supported by Swiftnet’s commercialisation of the masts and towers portfolio. 

Enterprises’ demand for hardware and software remained healthy and grew in double digits at BCX.

However, overall revenues were impacted by the continued decline in traditional voice and data revenues as customers are migrating to next-generation (NGN) products.

“The continued uptake of our NGN products by retail and enterprise customers grew both active mobile and fixed subscribers,” the company said. 

“This, along with double-digit increases in data consumption, bode well for the Group NGN revenue.”

NGN revenue grew by 5.1%, offsetting traditional revenue declines. 

While NGN revenues advanced by R440 million, traditional revenues retracted R219 million, leading to group revenue growth of R221 million for the quarter.

Telkom’s mobile subscribers grew by 6.4% to 19.7 million, while mobile data traffic increased by 19.7% to 370 petabytes. 

Also noteworthy is the advancement of mobile broadband subscribers by 10.9% to 12.7 million, indicating growing smartphone users in Telkom’s markets.

Mobile data revenue grew by 11.5% as a result, supported by higher prepaid recharges along with price increases.

Telkom’s EBITDA was stable at R2.48 billion, supported by revenue growth and cost reductions from the organisational restructuring effected in Q1 FY2024. 

However, the resulting EBITDA margin of 21.9% decreased.

This was largely affected by product mix at BCX, higher expected credit losses on trade receivables as retail and enterprise customers remained under pressure from the weak macroeconomic environment, as well as load shedding-related costs. 

“We have worked relentlessly at mitigating the risk and impact of load-shedding on our operations, and capital expenditure investments made in alternative energy sources to improve our mobile and fibre networks’ resilience yielded results,” the company said. 

“Diesel consumption and related costs at Openserve have decreased, and network availability for our mobile network availability improved to 94% from 89%.”

Serame Taukobong
Telkom CEO Serame Taukobong

Swiftnet sale

Telkom also provided an update on its potential sale of Swiftnet today.

On 8 January 2024, Telkom advised shareholders that it is currently in exclusive negotiations with a preferred bidder about the potential disposal of its masts and towers business housed in Swiftnet.

The company also said that the preferred bidder is a consortium of equity investors led and managed by a reputable private equity firm.

“Shareholders are herewith further informed that substantial progress has been made on meeting the remaining agreed milestones under the exclusivity arrangement,” Telkom said in a cautionary announcement today.

“The company expects to be able to make a more detailed announcement on or before it is required to update this cautionary announcement in accordance with the JSE Listings Requirements.”

According to JSE Listings Requirements, after a company has issued a cautionary announcement, it must issue a progress report by way of a further cautionary announcement at least every 30 business days thereafter.

The company must do so until full details on the subject of the cautionary announcement have been announced.

“Shareholders are advised that these exclusive negotiations may or may not lead to a transaction, and therefore, are advised to continue to exercise caution when dealing in the company’s securities until a further announcement is made,” Telkom said.


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