Telkom quarterly results in a nutshell

Daily Investor • 14 February 2023

Telkom’s share price jumped 7% on Tuesday after the company updated the market on its quarterly results, which included retrenchments to cut costs.

Telkom’s trading update revealed that revenue for the quarter was up 2.3% to R11.031 billion, but EBITDA was down 13.5% to R2.492 billion.

Revenue growth was mainly a result of mobile revenue increasing by 7.0% to R5.685 billion and mobile subscribers growing 12.9% year-on-year to 18.6 million subscribers.

Telkom CEO Serame Taukobong said their mobile and broadband strategies continued to bear fruit.

“Mobile broadband customers now comprise almost 62% of total active mobile subscribers, while Openserve’s open-access network gained traction,” he said.

Telkom said the impact of ongoing load shedding for the quarter and the increased mobile network footprint resulted in a higher cost base.

Telkom has embarked on cost-saving initiatives targeting a reduction of costs over the next six to eighteen months.

One of the cost-cutting measures is cutting staff by up to 15%. It will begin formal proceedings to restructure the company in terms of section 189 of the Labour Relations Act.

“The S189A process will impact all business units and subsidiaries and is intended to ensure the sustainability of the group,” Telkom said.

The company hopes to return to a blended EBITDA margin of more than 25% after implementing the cost-cutting measures.

“The benefits of these initiatives are expected to be visible in the medium term from FY2024 onwards,” Telkom said.

The market liked Telkom’s quarterly update and cost-cutting plans, sending the share price 7% higher on the news.