Year ended March 31 | |||
2002 | 2003 | % Change | |
---|---|---|---|
International outgoing | 1,175 |
1,284 |
9.3 |
Interconnection | 1,798 |
1,773 |
1.4 |
Data | 3,913 |
4,507 |
15.2 |
Directories and other | 687 |
759 |
10.5 |
Total fixed-line operating revenues | 27,976 |
29,635 |
5.9 |
Operating revenue from our fixed-line segment, before inter-segmental eliminations, increased 5.9% (2002: 5.8%) primarily due to increased traffic revenue, as a result of average tariff increases and growth in data services revenue. Traffic was adversely affected in both the 2003 and 2002 financial years by the increasing substitution of calls placed using mobile services rather than fixed-line services. Traffic declined 0.7% (2002: 0.3% decrease), however, revenue per fixed access line continued to improve, increasing 5.5% (2002: 10.1%) to R4,989 (2002: R4,729). This was due to increased average tariffs, higher penetration of value-added voice services and increased penetration of higher revenue generating access services. Data revenue increased 15.2% (2002: 17.6%) mainly due to higher demand for data services.
Year ended March 31 | |||
2002 | 2003 | % Change | |
---|---|---|---|
Fixed-line operating expenses In ZAR millions | |||
2002 |
2003 |
% Change |
|
Employee expenses | 6,611 |
6,698 |
1.3 |
Payments to other network operators | 6,759 |
6,726 |
0.5 |
SG&A | 4,650 |
3,312 |
28.8 |
Services rendered | 2,138 |
2,489 |
16.4 |
Operating leases | 1,148 |
1,155 |
0.6 |
Depreciation and amortisation | 4,363 |
5,105 |
17.0 |
Other income | 118 |
198 |
67.8 |
Total fixed-line operating expenses | 25,551 |
25,287 |
1.0 |
Fixed-line operating expenses, before inter-segmental eliminations, were relatively flat in the 2003 financial year, decreasing 1.0% (2002: 13.0% increase) to R25,287 million (2002: R25,551 million) primarily due to reduced selling, general and administrative expenses. Selling, general and administrative expenses were impacted in the 2002 financial year by the inclusion of a R346 million write-off of Telcordia-related assets and the inclusion of a R325 million provision, before interest and legal costs, related to the Telcordia dispute. Excluding these items, selling, general and administrative expenses decreased primarily due to a R276 million reduction in the bad debt provision on our balance sheet, as well as lower materials and maintenance expenses due to reduced losses in respect of cable theft and lower fault rates. Bad debts written-off against the provision decreased by 39.5% (2002: 1.8% increase) to R491 million (2002: R812 million). The decrease in fixed-line operating expenses was partially offset by increased depreciation and amortisation and services rendered, while operating leases, payments to other network operators and employee expenses remained relatively constant. Fixed-line operating profits increased 79.3% (2002: 36.5% decrease) to R4,348 million (2002: R2,425 million) with operating margins increasing to 14.7% (2002: 8.7%). Fixed-line EBITDA increased 39.3% (2002: 15.7% decrease) to R9,453 million with EBITDA margins increasing to 31.9% (2002: 24.3%).
Mobile
The mobile segment accounted for 22.3% of group operating revenues (2002:
19.3%) (after inter-segmental eliminations) and 33.3% of group operating profits
(2002: 43.3%). Vodacom is the largest mobile communications network operator in
South Africa with an estimated 57% share of mobile customers as of March 31,
2003 based on total estimated customers. Vodacom also has investments in mobile
operators in Lesotho, Tanzania and the Democratic Republic of the Congo.
Vodacoms operational statistics are presented below at 100%, but all financial
figures are the 50% proportionately consolidated into the group.
Year ended March 31 | |||
2002 | 2003 | % Change | |
---|---|---|---|
Mobile operating revenue In ZAR millions | |||
2002 |
2003 |
% Change |
|
Airtime | 4,743 |
5,650 |
19.1 |
Interconnection | 2,150 |
2,655 |
23.5 |
Equipment sales | 814 |
1,132 |
39.1 |
International services | 151 |
270 |
78.8 |
Other sales and services | 217 |
183 |
15.7 |
Other sales and services | 217 |
183 |
15.7 |
Total mobile operating revenue | 8,075 |
9,890 |
22.5 |
During the year, the mobile segment delivered strong revenue growth of 22,5%, before inter-segmental eliminations, to R9,890 million (2002: R8,075 million), primarily driven by customer growth and an increase in equipment sales. Revenue from Vodacoms operations outside of South Africa as a percentage of Vodacoms total mobile operating revenue increased to 6.2% (2002: 4.6%). The growth in revenue can largely be attributed to a 26.0% increase in Vodacoms total customers to 8.6 million as of March 31, 2003 (2002: 6.9 million) resulting from strong growth in prepaid customers in South Africa and significant growth in customers outside of South Africa. In South Africa, total average monthly revenue per user (ARPUs) increased marginally to R183 (2002: R182). Contract ARPUs increased by 12.3% to R629 (2002: R560). During the year, South African contract churn decreased to 11.9% in 2003 (2002: 14.5%). Prepaid churn, however, remained relatively high at 34.0% (2002: 30.1%) due to greater competition, lower barriers to entry for prepaid customers and the volatile nature of the prepaid customer base.
Year ended March 31 | |||
2002 | 2003 | % Change | |
---|---|---|---|
Mobile operating expenses In ZAR millions | |||
2002 |
2003 |
% Change |
|
Employee expenses | 568 |
509 |
10.4 |
Payments to other network operators | 689 |
1,109 |
61.0 |
SG&A | 3,688 |
4,614 |
25.1 |
Services rendered | 57 |
65 |
14.0 |
Operating leases | 237 |
273 |
15.2 |
Depreciation and amortisation | 1,035 |
1,188 |
14.8 |
Other operating income | 15 |
34 |
126.7 |
Total mobile operating expenses | 6,259 |
7,724 |
23.4 |
Mobile operating expenses, before inter-segmental eliminations, increased by 23.4%, largely in line with the growth in revenue of 22.5%. Mobile selling, general and administrative expenses increased 25.1% in the year ended March 31, 2003 primarily due to an increase in selling and distribution expenses to support the growth in South African and other African operations and the increased competitiveness in the South African market.
Mobile payments to other network operators increased 61.0% in the year ended March 31, 2003 as a result of increased outgoing traffic and a higher volume growth of outgoing traffic terminating on the other mobile networks relative to traffic terminating on the fixed-line network. The cost of terminating calls on other mobile networks is higher than calls terminating on Telkoms fixed-line network.
Profit from operations increased 19.3% (2002: 42.2%) to R2,166 million (2002: R1,816 million) and operating profit margin decreased marginally to 21.9% (2002: 22.5%). Mobile EBITDA increased 17.6% (2002: 36.1%) to R3,354 million with EBITDA margins decreasing to 33.9% (2002: 35.3%).
Dividends
The board of directors has decided not to declare a dividend at this time, as
it believes it would be prudent to continue to focus on debt reduction in line
with the group strategy.
Audit report
The comprehensive financial statements, from which the preliminary results
have been derived, have been audited by the joint auditors Ernst & Young and
KPMG. Their unqualified opinion is available for inspection at the companys
registered office.
Outlook
Increased competition and emerging technologies place greater importance on
the need to further develop our group strategy to maintain our leadership
position and deliver value for shareholders.
We will continue to improve the competitiveness of our fixed line business by improved customer service, innovative products and competitive pricing. We have also started to work more closely with Vodacom on potential synergies in areas such as marketing, procurement and products, that will build value for both operators. Our performance will be further enhanced by our commitment and ability to drive operational efficiencies, increase cash flows and reduce debt.
NE Mtshotshisa | SE Nxasana |
Non-executive chairman | Chief executive officer |
June 23, 2003 Johannesburg Telkom SA Limited | |
Registration number: 1991/005476/06 | |
Registered office: Telkom Towers North, 152 Proes Street, Pretoria, 0002, South Africa |
|
Postal address: Private Bag X881, Pretoria, 0001 | |
Board of directors: NE Mtshotshisa (Chairman), SE Nxasana (CEO), SM McKenzie (COO)*, CK Tan (CSO)#, JP Klug*, Tan Sri Dato ir. Md. Radzi Mansor#, RP Menell, MP Moyo, TA Sekano, CL Valkin, TG Vilakazi, VV Mashale (Company Secretary) * American # Malaysian |
|
Sponsor: UBS Securities South Africa (Proprietary) Limited Transfer secretaries: Computershare Investor Services Limited |
Operational data
Year ended March 31 | |||
2002 | 2003 | % Change | |
---|---|---|---|
Summary group financial statements and operational data | |||
Fixed-line |
|
|
|
Fixed access lines (thousands) | 4,924 |
4,844 |
(1.6) |
Fixed access lines (thousands) | 4,924 |
4,844 |
(1.6) |
Post paid |
|
|
|
PSTN | 3,554 |
3,285 |
7.6 |
ISDN channels | 467 |
563 |
20.6 |
Prepaid | 708 |
817 |
15.4 |
Payphones | 195 |
179 |
8.2 |
Fixed-line penetration rate (%) | 11.1 |
10.7 |
3.6 |
Revenue per fixed access line (ZAR) | 4,729 |
4,989 |
5.5 |
Total fixed-line traffic (millions of minutes) | 32,973 |
32,868 |
0.3 |
Local | 20,252 |
20,396 |
0.7 |
Long distance | 4,895 |
4,728 |
3.4 |
Fixed-to-mobile | 4,390 |
4,135 |
5.8 |
International outgoing | 375 |
439 |
17.1 |
Interconnection | 3,06 |
3,170 |
3.6 |
Internet customers | 48,995 |
98,690 |
101.4 |
Managed data network sites | 5,684 |
7,729 |
36.0 |
Number of full-time, fixed-line employees(excluding TDS and Swiftnet) | 39,444 |
35,361 |
10.4 |
Fixed lines per fixed-line employee | 125 |
137 |
9.6 |
Mobile |
|
|
|
Total customers (thousands) | 6,863 |
8,647 |
26.0 |
South Africa |
|
|
|
Customers (thousands) | 6,557 |
7,874 |
20.1 |
Contract | 1,090 |
1,181 |
8.3 |
Prepaid | 5,439 |
6,664 |
22.5 |
Community services telephones | 28 |
29 |
3.6 |
Churn (%) | 27.2 |
30.4 |
11.8 |
Contract (%) | 14.5 |
11.9 |
17.9 |
Prepaid (%) | 30.1 |
34.0 |
13.0 |
Average monthly revenue per customer (ZAR) | 182 |
183 |
0.5 |
Contract | 560 |
629 |
12.3 |
Prepaid | 93 |
90 |
3.2 |
Community services | 93 |
90 |
3.2 |
Number of employees | 3,859 |
3,904 |
1.2 |
Number of customers per employee | 1,699 |
2,017 |
18.7 |
Other African countries |
|
|
|
Customers (thousands) | 306 |
773 |
152.6 |
Average monthly revenue per customer |
|
|
|
Lesotho (ZAR) | 144 |
104 |
27.8 |
Tanzania (USD) | 27 |
22 |
18.5 |
Democratic Republic of the Congo (USD) | n/a |
20 |
n/a |
Number of employees | 494 |
502 |
1.6 |
Number of customers per mobile employee | 619 |
1,540 |
148.8 |
Year ended March 31 | |||
2002 | 2003 | % Change | |
---|---|---|---|
Audited consolidated income statements in ZAR millions | |||
2002 |
2003 |
% Change |
|
Operating revenue | 34,197 |
37,600 |
10.0 |
Other income | 144 |
234 |
62.5 |
Employees expenses | 7,166 |
7,208 |
0.6 |
Payments to other operators | 5,762 |
6,185 |
7.3 |
SG&A | 8,402 |
7,888 |
6.1 |
Services rendered | 2,195 |
2,541 |
15.8 |
Operating leases | 1,217 |
1,205 |
1.0 |
Depreciation and amortisation | 5,408 |
6,293 |
16.4 |
Johanesburg
23 June 2003
Date: 23/06/2003 08:00:34 AM Produced by the JSE SENS Department
23/06/2003 Source: JSE NEWS SERVICE