South Africa’s oldest telecommunications company takes a hit

Despite significant efforts made in turning the company around, Telkom’s results for the first quarter of its 2026 financial year took a significant hit from its BCX business. 

Therefore, while the company’s profit margins improved over this period, revenue remained largely flat as BCX delivered disappointing results.

On Tuesday, 5 August, Telkom released a trading update for the quarter ended 30 June 2025, which showed a mixed performance for the telecoms giant.

This comes as the company is implementing measures to improve its performance and win back market share after lagging competitors like MTN and Vodacom for years.

Telkom made significant strides toward these goals in the first quarter, which led to improved profitability and EBITDA growing by a solid 6.5%.

CEO Serame Taukobong explained that Telkom’s data-led strategy continued to be a competitive advantage during the period.

He said the company’s ongoing focus on operational excellence across its business units continued to drive sustained performance.

“We are optimising selling channels, continuously improving customer experience on our networks and providing customer-centric value with affordable and flexible offerings to seamlessly connect customers as we digitally transform South Africa,” he said. 

However, the company recorded meagre group revenue growth of 1.1% to R10.82 billion, with increased contributions from the company’s mobile data and fibre-based services.

Group data revenue grew by 7.1% over the quarter to R6.36 billion, making it the biggest contributor to the total. Mobile data revenue increased by 9.6%, and Openserve fibre data revenue grew by 11.3%.

“It is the performance of data revenue that gives us confidence that we are heading in the right direction to achieve our new medium-term guidance of mid-single digit growth,” Taukobong said.

The company specifically highlighted the strong performance from Telkom Consumer, which grew mobile service revenue by 7.8%, gaining value market share and outpacing South African market growth rates.

This segment also saw strong subscriber growth, with mobile data users growing by 27.5% year-on-year and making up 72.1% of the 17.2 million total mobile subscribers.

Despite this strong performance, the company’s BCX business proved to be a drag on the results, with this segment’s revenue down 8.3% and its EBITDA declining by 25.3%.

Telkom attributed this to the deliberate moderation of hardware and software sales, together with the managed migration of legacy services to fibre solutions.

However, even excluding these deliberate portfolio decisions, annuity-based revenue remained flat.

The company explained that Telkom is focusing its attention on transforming to higher-margin, recurring IT and fibre-led services and has seen strong growth in these areas.

BCX’s fibre-related data revenue grew 6.8% to 89% of data services, while voice remained stable. This helped to partially mitigate lower revenue within the Converged Communications business. 

In the IT business, the reduction of exposure in hardware and software sales, which declined 9.8% or R113 million, is aligned with Telkom’s shift to scalable, service-based revenue. 

Despite IT services revenue decreasing by 3.1%, Telkom said it is gaining share in high-value segments. 

“We are actively embedding technology enhancements across our service delivery and operations to enhance client experience and drive operational efficiency,” the company said.