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17 November 2014

Telkom turnaround strategy remains on track

Telkom SA SOC Limited today published its interim results for the six months ended 30 September 2014. Key highlights are:
  • Group EBITDA excluding one-off items increased by 12.1% to R4.4bn
  • Headline earnings per share excluding  one-off items increased 14.9% to 261.7 cents
  • Net revenue increased 1.6% to R13.3 billion
  • Net debt to EBITDA remains low at 0.1x
  • Operating expenses, excluding depreciation and one-off items, decreased 2.4% to R9.2 billion
During the period under review, Telkom recorded strong cash flow, improved operating margins, and a healthy performance from our mobile business in particular.
Net revenue was stable at R13.3 billion, which is a 1.6% increase against the prior comparable period. This, in light of the tough economic and business environment, shows the resolve of management to curtail losses and improve the business going forward. Fixed-line voice and interconnection revenues remained under pressure and decreased 11.0% to R4.3 billion; while mobile revenue increased 55.0% to R1.4 billion.
“Our results for the first six months of the 2015 financial year confirm that the business is on track for future growth. Our multi-year turnaround strategy, which began in 2013, is paying off,” said Sipho Maseko, Group Chief Executive Officer of Telkom.
“We expect that this positive momentum will continue for the remainder of the financial year.”
Group operating expenses remain an area of focus as we address our entire operating cost base, extracting efficiencies as well as improving our ability to respond to an evolving industry. As part of our multi-year cost transformation programme, the focus has been to reduce all costs including employee, marketing and security costs. We also decreased our number of leased vehicles. Operating expenditure, excluding depreciation, decreased by 2.4% to R9.2 billion. This was largely due to a R199 million reduction in employee expenses relating to lower service and interest cost as a result of the lower  post-retirement medical aid liability and a lower headcount.
Group EBITDA improved 12.1% to R4.4 billion, with a consolidated EBITDA margin (excluding one-off items) increasing to 27.7%. The mobile business produced a solid performance with EBITDA improving 50.7% from the prior period. We expect to realise our operating margins as cost savings linked to our various initiatives begin to filter through.
Our capital structure remains strong as we continue to take a measured approach to our capital investment programme with a focus on returns. In this regard, we continue our focus of extracting efficiencies from our assets and liabilities. This has resulted in a significant increase in free cash flow to R1.7 billion.  Over the next six months, we will continue rigorously focusing on project selection, concentrated roll-outs and relevant technology deployment, and expect an accelerated capital investment over this period. 
Customer service remains a high priority throughout the group, and we made good progress over the period. We were recognised as the best Fixed and Mobile broadband provider at the 2014 MyBroadband conference.  These awards are based on services offered and innovation in the broadband space.
We are aware of the significant challenges that lie ahead for the next six months, including the continuous decline in our fixed voice revenue, self-provisioning by other licensed operators and the need to improve our service offering.
We remain determined to successfully execute our strategy by focusing on the following priorities and enablers in the near-term:
  • Deliver a superior customer experience;
  • Disciplined capital allocation with greater emphasis on productivity and returns;
  • Complete corporate transactions – awaiting approval for MTN agreement and BCX;
  • Improve efficiency – address all costs; and
  • Find revenue growth – to secure our future.
“We will continue to accelerate the positive momentum achieved in the past six months of the financial year. We are focused on improving customer service and are committed to stabilising Telkom to build a better future,” concluded Maseko.

For further enquiries, please contact:

Pynee Chetty

Senior Specialist: Media Relations

Group Communication

Tel:+27 12 642 1716

Mobile: +27 81 389 7874



Leigh-Ann Francis

Specialist: Media Relations

Group Communication

Tel: +27 12 642 1728

Mobile: +27 81 391 4780


Telkom Park, The Apex

92 Oak Avenue





Telkom is a leading communications services provider in South Africa. We had consolidated operating revenue of R16.8 billion and normalised profit after tax of R1, 683 million for the period ended 30 September 2015. Total assets amounted to R41.9 billion and equity attributable to the owners of Telkom to R23.5 billion as of 30 September 2015. The group generated normalised free cash flow of R1.4 billion for the period ended 30 September 2015.

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.