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Telkom is taking bold action to improve company performance

Group salient features for year ended 31 March 2013

• Profit after tax, excluding impairment, increased to R501 million from R179 million in 2012
• Revenue decreased 1.7% to R32.5 billion
• Operating costs, excluding impairment increased 2.2% to R32,0 billion
• Free cash flow increased by 18.6% to R2.1 billion
• Net debt decreased 46.0% to R2.1 billion

Telkom SA SOC Limited today reported its 2013 annual results with an increase in profit after tax, excluding a R12 billion impairment, of R501 million from R179 million in the prior period. The impairment was taken to bring the net asset value of the Group in line with current market realities.

Revenue declined 1.7% to R32.5 billion largely as a result of continued pressure on the Group’s fixed line operations. Data revenue, which constituted 33% of total revenue, increased 5.5% as a result of a 5.2% increase in the number of ADSL subscribers to 870,505.

Operating expenses increased 2.2% to R32.0 billion for the year. This was primarily due to increased cost of procurement, provisions for voluntary severance packages, a Competition Tribunal fine and other legal matters.

Lower revenue and higher operating costs placed strain on EBITDA, which declined 16.8% to R7,109 million. Notably, however, free cash flow remained strong at R2,132 million after capital investment of R5,738 million, which increased 20% year-on-year. This can be largely attributed to the substantial investment in the upgrade of the Group’s network.

Telkom remains lowly geared, with net debt decreasing 46.0% to R2.1 billion from the prior period. Strong cash flow from operations and low gearing places the Group in a solid position to fund its capital expenditure programme.

The Group reported a basic earnings loss of 2,276.2 cps as a result of the inclusion of the impairment. Headline earnings per share was 87.0cps, which is a 73.2% decrease from the prior period.

“Our results reaffirm the need to take bold action to turn around the Group’s financial trajectory,” said Sipho Maseko, group chief executive officer at Telkom. “Despite the current financial performance, there is significant opportunity for Telkom to build a profitable and sustainable business that is able to support South Africa’s economic development.”

Success will require a complete transformation of the Group. A full strategic review is currently underway focusing on medium and short-term interventions to unlock value. Tough decisions will have to be made, particularly regarding costs. In this regard our immediate focus will be reviewing our staff numbers, optimising our property portfolio and decommissioning of unprofitable services.

Furthermore, it is critical for us to put our customers at the centre of what we do to improve our service delivery and enhance their experience. The upgrade of Telkom’s network, which will accelerate over the medium-term, is essential to achieve this objective. ”

Telkom is well positioned through its unique fixed line infrastructure and network to play a vital role in the rollout of broadband on a commercial basis.

For further enquiries, please contact:

Telkom Park, The Apex 92 Oak Avenue Technopark Highveld Centurion

As of 30 September 2015, we had approximately 3.3 million telephone access lines in service and 1,030,441 ports connected via MSAN access. We offer business, residential and payphone customers a wide range of services and products, including:

• fixed-line retail voice services using PSTN (Public Switched Telephone Network) lines, including ISDN (Integrated Services Digital Network) lines, and the sale of subscription based value-added voice services and calling plans;
• fixed-line customer premises equipment rental and sales services both voice and data needs and these include PABX, Computers, Routers, Modems, Telephone handsets and other ancillary equipment;
• interconnection services, including terminating and transiting traffic from South African mobile operators, as well as from international operators and transiting traffic from mobile to international destinations;
• fixed-line data services, including domestic and international data transmission services, such as point-to-point leased lines, ADSL (Asymmetrical Digital Subscriber Line) services, packet-based services, managed data networking services and internet access and related information technology services;
• Data Centre Operations includes e-commerce, application service provider, hosting, data storage, e-mail and security services;
• W-CDMA (Wideband Code Division Multiple Access), a 3G next generation network, including fixed voice services, data services and nomadic voice services;
• mobile communication services, including voice services, data services and handset sales through our mobile navbar-brand called Telkom Mobile;
•  information and communication services including cloud services, infrastructure services, workspace services, global service integration management and hardware and network equipment sales locally, in seven African countries, the UK and Dubai through Business Connexion Group; and
• other services including directory services, through Trudon (Pty) Ltd, wireless data services, through Swiftnet (Pty) Ltd.

Convergence is one of our key strategic initiatives in building a sustainable future for Telkom.  We will lead the provision of converged services in South Africa in support of our mission statement: Seamlessly connecting people to a better life.