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Telkom delivers robust performance, doubles Mobile performance

Key salient features

• Revenue down 0.4% to R21.4 billion
• EBITDA up 6.3% to R5.9 billion with EBITDA margin at 27.6%
• BEPS and HEPS up 29.5% and 25.4% respectively
• Capex down 30.6% to R2.9 billion with capex to revenue ratio of 13.8%
• Adjusted FCF improved by R2.6 billion to R1.3 billion compared to a negative R1.3 billion in the prior year.
• Net debt to EBITDA improved to 1.0 times from 1.3 times as at 31 March 2020

Telkom SA SOC Limited today published robust interim results for the six months ending 30 September 2020, driven by strong mobile growth to claim the position of South Africa’s third mobile operator. Mobile customers are up 19% to 13.7 million with net additions of 2.2 million subscribers.

The Group delivered solid EBITDA growth despite a slight revenue decrease of 0.4% to R21.4 billion in the face of difficult trading conditions brought on by the COVID-19 pandemic.

“Telkom’s decision to invest in infrastructure ahead of demand enabled us to meet the surge in demand and weather the acceleration of the decline in fixed voice revenue during the national lockdown,” says Sipho Maseko, Telkom Group Chief Executive Officer.

WINS AND LOSSES

Telkom Mobile expanded margin by 13.2 ptts to 29.9%, optimised direct cost to revenue ratio from 53% in the prior period to 38% and more than doubled its EBITDA to R2.9 billion.

Mobile data traffic is up 81%, a significant increase attributable to the increase of people working from home and online schooling due to the national lockdown.

“Telkom Mobile has performed exceptionally well, despite the negative impact of the national lockdown on parts of our business,” says Maseko.

BCX and SMB saw a decline of 11.3% and 25% respectively, driven by a decline in enterprise fixed voice revenues.

The decrease in fixed voice volumes also impacted Openserve negatively with revenue declining by 13.6%, a shift driven by 22.7% decline in fixed voice revenue compared to the prior period. Despite this, Openserve maintained the highest connectivity rate in the market through improved fibre to the home connectivity rate from 43.6% in the prior year to 53.8%.

Gyro masts and towers revenue increased 7.7% to R628 million despite the slowdown in the permitting and construction process due to the national lockdown.

DELIVERING VALUE TO SHAREHOLDERS

Group EBITDA grew 6.3% to R5.9 billion and EBITDA margin expanded by 1.7 ppts to 27.6% despite the decline in the higher margin fixed voice revenue underpinned by our sustainable cost management programme.

The Group reported a healthy cash balance of R3.9 billion at 30 September. During the period, it strengthened the balance sheet by repaying maturing debt of R900 million resulting in improved net debt to EBITDA from 1.3 times as at 31 March 2020 to 1.0 times. No debt was raised in the first half of the year.

Headline Earnings Per Share (HEPS) grew by 25.4% per share compared to last year to 217.5 cents

Basic Earnings per Share (BEPS) improved by 29.5% to 219.0 driven by a growth in operating profit.

Telkom dividend is suspended for 3 years.

“We are pleased with a solid set of results in a year where growth was challenging due to the COVID-19 pandemic that strained the South African economy. These results reflect the quality and dedication of our people and business partners,” Maseko concluded.

For more information about Telkom products, visit www.telkom.co.za, follow Telkom on Twitter @TelkomZA and our page on Facebook.

ENDS

For further media enquiries, please contact: Media-Telkom@telkom.co.za