• Telkom’s financial results for 2023 highlight how effective changing direction can be for a business.
• Telkom saw revenue grow 1.6 percent to R43.2 billion with the mobile and fibre arms of the business leading the growth spurt.
• While average revenue per user is down R2 compared to a year ago, it’s tough not to be impressed at how well Telkom is doing in a rough market.

On the back of a “pleasing” third quarter in 2023, Telkom has now announced that its last financial year was a good one even in a struggling market.

The headlines are that revenue from mobile and fibre are the shining stars at the telco. Telkom’s mobile business rose 6.8 percent and that the service now boasts 20 million subscribers while Openserve now passes 1.2 million homes with its fibre network and connections to that network have increased 48.5 percent. Revenue from fibre was up 14.5 percent to R5.6 billion.

“BCX made good strides in growing its IT service revenue, and Swiftnet’s tower rollout programme and tenant growth further contributed to revenue growth and margin expansion for the Telkom Group,” the telco told shareholders.

Throughout 2023 Telkom invested R6.1 billion into network resilience, expanding its mobile network, modernising infrastructure and more. That investment is now paying off in a big way. Revenue across the group was up 1.6 percent to R43.2 billion despite the challenges that doing business in South Africa (read: loadshedding) presents.

The group says that Openserve has optimised its sites through the introduction of green energy solutions. This includes solar power and the use of lithium-ion batteries to keep the Openserve network up and running, even if loadshedding makes an unwelcome return.

However, something Telkom is likely keen to address is the fact that average revenue per user has fallen R2 to R84. While Telkom has clearly lured users to its fold, shareholders are likely looking at this figure and hoping it increases. Not that shareholders will be upset, in fact headline earnings per share were up 201 percent to 376 cents. That’s a massive departure from a year earlier.

Telkom says that the disposal of Swiftnet for R6.75 billion has been a boon to the group’s financials and shareholder approved the sale of the infrastructure arm in May.

“This approval indicates our shareholders’ support for management to explore further opportunities that enhance shareholder value,” the group said.

As for solutions, BCX isn’t doing well but it’s not performing poorly either. Revenue from BCX declined 2.3 percent to R12.9 billion.

“IT revenue increased by 9.9 percent to R7.2 billion, largely due to a strong performance from the hardware and software business. This performance, albeit at lower average margins, was driven by new product deals, existing software contract renewals and record cross-border sales. BCX complements hardware and software sales with higher-margin IT Services, as much as possible in the form of managed services. IT Services performed well, increasing revenue by 6.6 percent to R4.7 billion. This was supported by strong cybersecurity growth and steady growth of the data centre and infrastructure solutions business as demand for storage and cloud computing continued to grow in the market,” Telkom reports.

Telkom then appears to be making the best of a bad situation and it’s looking mighty strong these days. Of course, the company does need to boost that ARPU figure but as it stands, it’s going to be tough for shareholders to be too upset for too long.