Telkom shows signs of recovery

Telkom experienced a strong first quarter in its 2025 financial year, with impressive growth in EBITDA.

Telkom released a trading update for the first quarter through June 2024 today, which revealed good results for the telecoms giant.

It reported 3.9% growth in group revenue to R10.91 billion and a 24.1% increase in EBITDA to R2.78 billion.

However, Telkom noted that this earnings growth is on the back of a stronger Q1 FY2025 compared to the prior comparative period. 

“The growth is expected to moderate for the full year, driven by a higher base from the second quarter to the end of FY2024,” the company said.

Telkom also saw single-digit growth in next-generation (NGN) revenue, mobile service revenue, BCX revenue, IT revenue, and Swiftnet revenue.

“Telkom had a good start to the financial year with a pleasing performance on the top line, benefiting from our data-led strategy and compelling value propositions,” Telkom CEO Serame Taukobong said. 

“Our next-generation revenue streams continued their positive momentum and grew by R576 million, an increase of 7.0%. NGN revenues now comprise 80.7% of group revenue.”

The company said its NGN broadband offerings, enabled by its ongoing capital investment in our mobile and fibre networks, have positioned Telkom advantageously as the “best value mobile network”.

In addition, it said the connect-led strategy for its fibre network further improved its leading home connection rate to 49.0% for the quarter.

“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,” Taukobong explained.

“We are pleased that the Group expanded its EBITDA margin by 2.3 percentage points from 31 March 2024, driven by top-line growth and stringent cost management, despite inflation causing upward pressure on costs as our ongoing 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 fibre footprint where these investments contribute to top-line growth and overall profitability.”

The company further attributes its stronger financial performance to solid subscriber growth and the uptake of its NGN data offerings.

It said this was achieved despite weak economic conditions and a challenging trading environment. 

Key contributors to strong 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%.

“We saw continued momentum in demand for data traffic and mobile with fixed traffic growing 25.8% and 33.0%, respectively, y-o-y,” the company said. 

“Our mobile subscribers advanced by 14.6% and surpassed the 21 million mark with a stable pre-paid ARPU and post-paid base, while homes connected with fibre grew by strong double digits, at 19.5% y-o-y.”

It said these key 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 R2.78 million, with the group’s EBITDA margin improving to 25.5%, also benefiting from a stabilised electricity supply in South Africa during the quarter. 

Telkom also announced that it had received R161 million in proceeds from disposals of non-core property.

“Gyro continued to rationalise the property portfolio through accelerated disposal and transfer of properties that are no longer core for the group’s operational requirements,” Telkom said. 

“This ongoing process will continuously reduce the property footprint, optimise property operating costs and realise cash for Telkom.”

Gyro is a standalone Telkom subsidiary that owns and manages a portfolio of masts, towers, and other real estate for the Information and Communication Technology and Real Estate industries.

Telkom said it began the year with 42 properties, with a sales value of R287 million, undergoing the conveyancing process. It aims to transfer them during the financial year.

From there, it successfully transferred 19 properties and realised sales proceeds of R161 million in the first quarter.

The first auction for additional properties approved during the quarter was completed in June, resulting in sale offers for nine properties to the value of R33 million. 

Gyro plans to dispose of more non-core properties – including those previously earmarked for property development – during the rest of the year.