Telkom operating revenues slump 5.4%; may ditch Nigerian cellco Multilinks

22 Nov 2010

South African telco Telkom has reported operating revenues of ZAR18.6 billion (USD2.6 billion) for the six months ended 30 September. This figure represents a decrease of 5.4% compared to the ZAR17.6 billion reported in the same period one year earlier. EBITDA slipped 0.6%, to ZAR5.09 billion. The decrease in revenues is blamed on lower traffic volumes and fixed rate termination cuts; new mobile termination rates (MTRs) introduced in March this year reportedly reduced Telkom’s revenues by approximately ZAR540 million.

In operational terms, fixed line telephony customers grew 16.1% to 738,396 as at 30 September, whilst Telkom’s broadband subscriber base increased 16% to 699,368. Meanwhile, Telkom’s long awaited mobile unit 8ta – which launched on 18 October – signed up 186,033 in its first month of operation.

In an accompanying statement Telkom CEO Jeffrey Hedberg explained that there is an ‘immediate requirement to exit poor performers’, with under-performing Nigerian cellco Multilinks widely expected to be first in line, after registering a loss of ZAR262 million in the six month period in question. Multilinks’ subscriber base slumped 8.4% to 1.86 million during the period. Hedberg has estimated the ‘exit cost’ at anywhere between USD100 million and USD180 million. According to TeleGeography’s GlobalComms Database, two unnamed investors made offers for the struggling cellco in July 2010; Telkom wrote down the value of Multilinks by ZAR5.2 billion in the financial year ended 31 March 2010. Hedberg has reiterated: ‘Speed of exit is a priority’.

South Africa, Multi-links, Telkom South Africa