Telkom FY10/11 revenues down 5.2%; data gains fail to offset voice slump

13 Jun 2011

South African telco Telkom has reported operating revenues of ZAR33.4 billion (USD4.87 billion) for the twelve months ended 31 March 2011. This figure represents a decrease of 5.2% compared to the company’s full year revenues one year earlier. During the reporting period in question EBITDA slipped 11.4%, to ZAR9.16 billion. Of Telkom’s core revenues, voice services generated ZAR13.7 billion, representing a decrease of 16.8% year-on-year. Meanwhile, data revenues climbed 7.7% year-on-year, to ZAR10.7 billion. The decrease in voice revenues has been blamed on lower termination rates, which were introduced in March 2010.

In operational terms, fixed line telephony customers grew 9.5% to 783,193 as at 31 March, whilst Telkom’s ADSL broadband subscriber base increased 16.1% to 751,625. In addition, the operator reported 3,199 WiMAX subscribers, a 7.4% rise year-on-year. Meanwhile, Telkom’s long awaited mobile unit 8ta – which launched in October 2010 – signed up 473,604 subscribers in its first six months of operation. TeleGeography notes that this subscriber data refers to customers who have used an 8ta SIM card during the previous 90 days, an unusually large reporting window. A total of 1,199,596 customers are said to have activated 8ta SIM cards since the cellco’s inception.

Telkom South Africa CEO Nombulelo Moholi commented: ‘The year under review has been tough, with revenue declining 5.2% to ZAR33.4 billion. Competition, pricing pressures and regulatory intervention have all had an impact on our revenue. The declines seen in our traditional fixed line voice revenue are set to continue. Operating expenditure decreased 1.5% to ZAR29.7 billion, despite the 10.3% growth in employee expenditure to ZAR9.7 billion and mobile start-up expenditure of ZAR1.2 billion. This decrease is largely as a result of the drop in termination rates payable to the other mobile operators. The years of investment in our network have allowed our data revenue to grow 7.7% to ZAR10.7 billion. This is a good achievement given the muted economic conditions and intensifying competition. These basic dynamics demand that we focus our efforts on those areas where we are growing and can differentiate from our competitors. Capital expenditure going into the future will be aimed at growing our ability to service enterprise customers and other value clusters and provide far superior broadband speeds. It is about increased capacity and connectivity. We have to capitalise on Telkom’s strength – the network and relationships with business – to provide higher speeds and end-to-end reliability that cannot be matched by our competitors’.

South Africa, Telkom South Africa