Saturday, 26 November
The company lowered its medium-term profit outlook due to climbing costs in its mobile business, the “accelerated decline” of its legacy business and the impact of load shedding.
Group revenue was marginally down by 0.7% to R21.2 billion. Earnings before interest, taxes, depreciation, and amortisation (Ebitda) was down 17.3% to R4.9 billion
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Revenue from IT was up 16.5% to R3.1 billion, while mobile revenue was up slightly to R10.7 billion, with its mobile customer base growing by 10.9% to 18 million. Openserve’s revenue declined by 4.3%.
Rising costs, including for handsets, hit Telkom’s margins, including energy costs due to intensive load shedding during the period. In addition, constrained consumer spending as a result of rising interest rates, increasing electricity and fuel prices, a sluggish economy and high unemployment also contributed to lower earnings.
“As competition intensified in the mobile sector, we continued to innovate to protect Telkom’s value proposition in the market. We continued to pursue our migration strategy and managed the transition further from old to new technologies. However, this migration impacted our revenue growth and overall profitability,” Telkom said in a market update.
“Given the material increases in the cost of sales for Telkom Mobile, the accelerated decline of the legacy business at Openserve, BCX and Consumer, plus the impact of load shedding, we are revising our guidance to the market. In the medium-term, we expect revenue and EBITDA to grow at low to mid-single digit percentages,” says Telkom.
Management is currently exploring various options of realising the value of the mast and towers business.
Telkom also announced the resignation of Sello Moloko as chairperson at the end of March 2023.
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