Fixed-line voice is a problem for Telkom as mobile soars

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Today is annual results day for Telkom and while revenue from the group is up 3 percent, to R43 billion, there is a problem child.

That problem child is fixed-line voice which Telkom has said has impacted the group’s earnings before interest, taxes, depreciation and amortisation (EBITDA).

“Our challenge for the year was the impact of the fixed voice revenue on group EBITDA as the decline intensified. The growth in new revenue streams was not sufficient to offset the decline caused by high margin fixed voice on group EBITDA,” said Telkom in an earnings statement.

How big was the decline in fixed-line voice? Telkom reports that fixed voice revenue fell 22 percent.

Telkom expects that over time, as its revenue mix evolves, a lower contribution from fixed-line voice revenue will be offset by a higher contribution from the mobile side of the business.

“We saw the technological shift from legacy technologies to fibre, LTE/LTE-A, and our revenues evolved from legacy fixed revenue to new revenue streams,” says Telkom Group chief executive, Sipho Maseko.

“In line with this technology shift, the business is aligning its skills base with the latest technological advancements,” added Maseko.

On that note, Telkom’s mobile business is doing very well indeed.

The firm reports that the mobile business grew 54.4 percent with 12 million customers bringing in R12.6 billion.

“This was underpinned by our ongoing network investment and successful broadband-led propositions, which continue to resonate well with customers. Despite ongoing competitive threats with changes implemented by our competitors in the mobile space, our broadband-led propositions are market leading, being best in class for value and effective pricing,” Telkom told investors.

Unfortunately for those investors, their investment is worth slightly less.

Headline earnings per share declined 66.4 percent to 208.1 cents per share. Telkom says that this is due to once-off costs relating to voluntary severance packages, voluntary early retirement packages, COVID-19 and a high effective tax rate.

Telkom says that it has added 1.9 million new customers in the last year bring the total to 12 million customers.

[Source – Telkom SENS]

Brendyn Lotz

Brendyn Lotz

Brendyn Lotz writes news, reviews, and opinion pieces for Hypertext. His interests include SMEs, innovation on the African continent, cybersecurity, blockchain, games, geek culture and YouTube.