Telkom has increased EBIDTA, earnings and revenue during the six months ended 30 September, while reducing its expenses.
The company today published its six-month results, reporting that group EBITDA excluding one-off items increased by 12,1% to R4,4-billion, while headline earnings per share excluding one-off items increased 14,9% to 261.7 cents.
Operating expenses, excluding depreciation and one-off items, decreased 2,4% to R9,2-billion.
During the period under review, Telkom recorded strong cash flow, improved operating margins, and a healthy performance from our mobile business in particular.
Net revenue was stable at R13,3-billion, which is a 1,6% increase against the prior comparable period. This, in light of the tough economic and business environment, shows the resolve of management to curtail losses and improve the business going forward. Fixed-line voice and interconnection revenues remained under pressure and decreased 11% to R4,3-billion; while mobile revenue increased 55% to R1,4-billion.
“Our results for the first six months of the 2015 financial year confirm that the business is on track for future growth. Our multi-year turnaround strategy, which began in 2013, is paying off,” says Sipho Maseko, group CEO of Telkom.
“We expect that this positive momentum will continue for the remainder of the financial year.”
Group operating expenses remain an area of focus as the company addresses its operating cost base, extracting efficiencies as well as improving its ability to respond to an evolving industry.
“As part of our multi-year cost transformation programme, the focus has been to reduce all costs including employee, marketing and security costs,” Maseko says.
“We also decreased our number of leased vehicles. Operating expenditure, excluding depreciation, decreased by 2,4% to R9,2-billion. This was largely due to a R199-million reduction in employee expenses relating to lower service and interest cost as a result of the lower post-retirement medical aid liability and a lower headcount.”
Group EBITDA improved 12,1% to R4,4-billion, with a consolidated EBITDA margin (excluding one-off items) increasing to 27,7%. The mobile business produced a solid performance with EBITDA improving 50,7% from the prior period.
“We expect to realise our operating margins as cost savings linked to our various initiatives begin to filter through.”
The capital structure remains strong as Telkom continues to take a measured approach to its capital investment programme with a focus on returns.
“In this regard, we continue our focus of extracting efficiencies from our assets and liabilities,” Maseko says. “This has resulted in a significant increase in free cash flow to R1,7-billion. Over the next six months, we will continue rigorously focusing on project selection, concentrated roll-outs and relevant technology deployment, and expect an accelerated capital investment over this period.
“Customer service remains a high priority throughout the group, and we made good progress over the period.”
Maseko adds that Telkom is aware of the significant challenges that lie ahead for the next six months, including the continuous decline in our fixed voice revenue, self-provisioning by other licensed operators and the need to improve its service offering.
“We will continue to accelerate the positive momentum achieved in the past six months of the financial year. We are focused on improving customer service and are committed to stabilising Telkom to build a better future,” he says.
