Telkom Reports Performances Growth Despite Load-Shedding Hits

Telecommunications company Telkom reported growth in performance for its quarter to end-June results. The South African third mobile operator revenues went up by more than 3% on Monday morning, however, the company is still feeling pressure from load shedding, constrained consumers, and its legacy systems.

Telkom said its performance is driven by a strong performance by both its 5.2% increase in mobile and fibre interest resulting to group revenue up 3.8% to about R10.6 billion to end-June.

“Telkom has started the 2024 financial year with good momentum,” said group CEO Serame Taukobong. “Group performance was pleasing in the face of rolling power outages, muted economic growth, continuing inflationary pressures on consumers and an intensely competitive landscape.”

Despite the positive performance at the top line, however, Ebitda – a measure of operating profit – fell by 4.2% to R2.2-billion.

“We are pleased that cost savings from our recent labour restructuring process offset the impact of load shedding as planned, but the legacy revenue declines along with higher ECL (expected credit loss) provisions weighed on overall group profitability,” Taukobong said. “The group will continue improving its cost base to improve profitability in the medium term.”

The group said the cost benefits from recent layoffs was “partially negated by the additional spend on diesel to mitigate the impact of load shedding, as well as a slight increase in direct costs, which were negatively impacted by the product mix for the quarter”.

“We also experienced an increase in the provision for bad debts, with consumers under increasing strain from the macroeconomic environment.”

The mobile operator is valued at over R15 billion on JSE, had a tough year after the company and Ramaphosa appeared at Pretoria High court where the proclamation was put aside after Telkom took the matter on review according to reports. And with the SIU investigation which obtained Telkom’s documents.

The company reported a fall in core profit of about a fifth, and revenue growth of less than 1%,

With load shedding negatively affecting the company, Taukobong said, “now largely been incorporated in our operating cost base but will continue to impact group profitability”. The group is investing on the resilience of its mobile and fibre networks and plans to switch from diesel to lithium batteries on many of its sites.