Telkom profits slide in 2008

23 Jun 2009

Incumbent fixed line operator Telkom South Africa has released its provisional group results for the full year ending 31 March 2009. The company posted a 29.6% drop in operating profit, down to ZAR6.39 billion (USD785.6 million) from ZAR9.07 billion at the end of March 2008. The incumbent’s bottom line was hit by the sale of assets such as mobile arm Vodacom and Telkom Media. EBITDA fell to ZAR11.7 billion from ZAR13.2 billion a year earlier, while revenues climbed 6.9% year-on-year to ZAR35.9 billion. Telkom invested heavily in its network infrastructure over the course of the year raising its capital expenditure from ZAR8.43 billion in FY2007 to ZAR9.63 billion a year later. The company said it is looking to the broadband sector and new mobile businesses to drive earnings. Reuben September, CEO of Telkom said, ‘Given the continued decrease in our voice revenues due to mobile substitution and increased competition it is vital for Telkom to explore all avenues that will provide us with growth and migrate traffic back on to our network. We now have the opportunity to enter the mobile market in South Africa. We are in the process of conducting comprehensive mobile market research to establish exactly how Telkom can maximise the opportunity at minimal operational and build cost. We believe that Telkom is able to take advantage of our next generation network and newer technologies will give us an advantage over the current mobile operators in terms of our ability to carry increased traffic, provide superior quality and to compete.’ The operator also announced that it would delist from the New York stock exchange in an effort to cut costs, as net earning per share (EPS) fell 45.9% over the course of the year.

In the twelve months to 31 March 2009 Telkom added 135,825 net new customers to its domestic broadband services, a 33% year-on-year increase. However, the number of fixed line accesses slipped 1.8% over the course of the year, to 4.45 million.

South Africa, Telkom South Africa, Vodacom Group