• Telkom announced it had grown revenue within the group to R11.3 billion.
• This growth was largely fuelled by Telkom Mobile and Openserve.
• BCX saw revenue fall slightly, but Telkom appears to be unbothered by this decline.

This morning Telkom revealed it had continued the trend of positive growth that it started in November 2023. The telco revealed in its earnings report for Q3 2023 that revenue had grown by two percent thanks to growth in the mobile division and Openserve.

Revenue for the telecommunications group grew to R11.3 billion largely fueled by a 4.8 percent increase in Mobile revenue. The mobile business is now worth R5.6 billion. Openserve meanwhile saw fixed data next-generation revenue grow by 6.2 percent.

“Group performance for the quarter was pleasing against a strong comparative quarter and Telkom managed to grow the top line as compelling value propositions drove next generation (‘NGN’) revenue growth and operating earnings, thereby affirming our data-led strategy,” Telkom Group’s chief executive officer, Serame Taukobong said.

“Our cost-reduction initiatives also contributed to improved operating EBITDA as they partially offset inflationary increases, increased bad debt provisions and the added cost of loadshedding. Telkom Consumer and Openserve made impressive progress and advanced operating earnings by 20.6% and 7.0% respectively,” he added.

The telco reports that it now has as many as 19.7 million mobile subscribers and mobile traffic grew to 370 petabytes. In addition, mobile broadband customers grew to 12.7 million in the quarter. The firm says that much of this growth comes from its prepaid segment with postpaid remaining flat during the reported period.

But it’s the growth within Openserve that is perhaps the most impressive, and could potentially keep Telkom’s head above water in future. The division says that the number of homes passed by its access network grew 16 percent to 1.1 million homes.

“Its drive to provide fibre connectivity to all South Africans, coupled with executing on its connect-led strategy, resulted in 20.8% increase in the number of homes connected to 567 350, while maintaining its market-leading connectivity rate of 47.9%. While Openserve saw a decrease in xDSL services to approximately 82 000, its focused execution in modernising its network through fibre deployment, resulted in an overall broadband growth of 6.6% to over 670 000 connections,” the telco told shareholders.

“As demand for connectivity and consumption increased, Openserve’s fixed data traffic grew by 24.4% to 612 petabytes for the quarter. While the next generation services continued to grow, the accelerated decline in total fixed voice revenue of 25.4% negatively impacted on the overall revenue resulting in a decline of 3.1% for the quarter to R3 120 million as anticipated,” it continued.

Telkom says that Openserve is now also reaping the benefits of reducing its reliance on Eskom. By moving to solar and battery (but not moving entirely away from diesel generators) Openserve reduced its diesel spend to R89 million, representing a reduction of 41.7 percent. It should be noted that during the reporting period – which includes December 2023 – loadshedding was reduced and so the spend on diesel would of course be lower.

However, even with the constant threat of loadshedding, Telkom says that availability of Openserve’s core network is now at 99.99 percent.

Perhaps the “worst” performer for Telkom was BCX which saw a 0.7 percent decline in revenue however, it wasn’t all bad news for the division

“The IT business grew revenue by double-digits of 13.1% to R2’120 million largely driven by the continued over-performance of the software and hardware business, that saw growth of 34.2% supported by the improved order fulfilment due to the easing of the global chipset shortage,” Telkom said in its earnings call.

“While the low-margin hardware and software business sustains revenue, it is done so strategically to allow BCX to gain access to a wider client base and facilitate expansion into high-margin IT services in order to improve the product mix. The business also benefitted from strengthened cloud offerings and solutions due to the acquisition of Dotcom,” it concluded.

Q3 then was relatively good for Telkom and we’re keen to see how well the telco performed throughout the year when it publishes the results for its 2024 financial year.