Telkom turns it around to end a turbulent year

  • Despite a trying first few months of 2023, Telkom has seen more favourable results as the year comes to an end.
  • Revenues grew to R21.8 million driven by boosts in mobile traffic services as well as the monetisation of its fibre rollout.
  • The telco also announced that it was embroiled in a process to sell off its masts and towers business Swiftnet.

After a dismal beginning of the year, semi-private South African network provider Telkom has reported a boost in its profits in the company’s latest interim results released on Tuesday.

In a statement, Telkom said its headline earnings per share grew to R1.95 in the six months ended 30th September 2023. This measure was previously at R1.33 per share. Revenues grew 2.5 percent to R21.8 million as mobile traffic services became more popular as well as its monetisation of fibre rollouts across the country.

It also saw “good growth of the IT business driven by increased demand for hardware and software by enterprise customers.”

In contrast, the telco’s financials were in disarray in February this year. That month it saw its core profits decline by 13.5 percent as poor economic conditions driven by relentless loadshedding inflated operating costs, and consumer spending was negatively influenced by high interest rates and inflation.

The group spent R150 million in additional costs in order to stave off the blackouts across its business operations that quarter. It joined other major South African corporations in spending billions to deal with loadshedding, including the likes of rivals MTN, Vodacom and retailers like Pick n Pay which also saw its bottom line hampered by the energy crisis.

“Despite the challenging macro-economic environment, our guidance for the [next financial year] remains unchanged,” Telkom said.

“Group revenue and earnings are expected to grow at low to mid-single digits as we focus on driving the top line and harnessing cost savings to improve profitability.”

Telkom looks to sell off its towers

On Tuesday Telkom said it was in negotiations with a preferred bidder on the possible sale of its masts and tower business, called Swiftnet.

“An official process was launched after the Telkom Board’s approval for the outright sale of Swiftnet, the masts and towers business. The disposal process is at its final stages,” the group explained in the results announcement.

Swiftnet has now been classified as an “asset held for sale,” in line with IFRS reporting requirements.

Telkom has begun a strategic shift to turn its businesses into “an infrastructure company.” It says it is doing this to drive growth through consolidating core assets and will complete this business transformation process by 2025.

“Once the infrastructure is in place and the masts and towers transition is concluded, Telkom will consider further opportunities to realise value, including those in relation to the minority partnerships for Openserve and a strategic equity partner for BCX,” it added of its fibre and ICT businesses, respectively.

Telkom seems set to join the likes of Cell C which recently completed a network transition away from physical towers and other infrastructure. The cash-strapped Cell C rid itself of this infrastructure in order to save costs on operations.

Telkom’s stock was trading up 6.36 percent today following the favourable results.


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