Telkom’s interim results, published on 23 November, revealed that its wholly-owned subsidiary, BCX, increased revenue by 0.8% on the back of 13.7% growth in IT business revenue.
It was the first time in five years that BCX did not experience a decline, and Telkom was quick to claim that BCX has made a strong recovery within the context of the current economic climate.
Telkom CEO Serame Taukobong added that the IT business is expected to continue to grow and that the group would continue to focus on managing costs.
However, despite the upbeat tone around BCX, it is too early to start popping the champagne corks.
Since Telkom acquired BCX in 2015, it has been on a downward spiral. Revenue declined from R10.7 billion in 2017 to R6.7 billion in 2022, and lost significant market share.
There are now a few green shoots, with revenue from external sources increasing marginally over the last year and EBITDA growing slightly from R837 million to R842 million.
Despite stemming the decline, BCX is by no means out of the woods.
BCX experienced a compounded annualised decline in interim revenue from external sources of 6.3% – a combined loss of R3 billion in interim revenue.
It happened when many other IT service providers showed strong growth, putting BCX’s poor performance in context.
The same downward trend is seen in BCX’s interim earnings before interest, tax, depreciation, and amortisation (EBITDA).
Since 2017, the ICT company has experienced a compounded annualised decline in interim EBITDA of 13.2%. It translates into the destruction of R1.12 billion in interim EBITDA.
So, while BCX’s recent results are encouraging, it has a long road ahead to show that it has turned the ship around.