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- Shares in ICT group Telkom lifted more than 3% on Monday, when it reported an improved performance for its first quarter to end-June.
- Robust mobile growth and demand for both its fibre offering, as well as hardware and software, benefited SA's third-largest mobile operator.
- But profits are still under pressure from loadshedding, while it is making higher provisions for bad debt as consumers take strain.
- For more financial news, go to the News24 Business front page.
Shares in Telkom, SA's third mobile operator, lifted more than 3% on Monday morning, when it reported a pick-up in performance for its first quarter to end-June, though it is still feeling pressure from load shedding, constrained consumers, and its legacy systems.
Group revenue up 3.8% to about R10.6 billion to end-June but core profit fell 4.2% to R2.2 billion, the mobile operator said, with its performance driven by a strong performance by both its mobile and its fibre interests.
The ICT group, which is valued at over R15 billion on the JSE, had a tough 2023, when it reported a fall in core profit of about a fifth, and revenue growth of less than 1%, hit by hefty write-downs of its legacy systems, frontloading of handset sale costs, and the effects of restructuring. In morning trade on Monday, the group's shares were up about 3% but are still down almost a third on a one-year basis.
Mobile service revenue was up 6.5% to R4.56 billion end June and data revenue just under 10%, the company said, with subscribers up almost 7% to 18.5 million, while data traffic was up more than a quarter.
Despite this, core profit in the mobile business fell 5.6% about R1.14 billion, with bad debts rising as consumers continue to take strain, as well as an increase in load shedding costs of R54 million.
Openserve, the group's fibre business, "continued accelerating its leadership in providing connectivity across SA," Telkom said, with fixed data next-generation network revenue rising 10.6%. Openserve grew its homes passed base by 24.4% to 1.1 million homes but was still feeling pressure from an accelerated decline in fixed-voice services, which were down 29% year on year.
Telkom said while Openserve "redesigned operating model has positively contributed" to its core profit, load shedding added R88 million in costs, and margins contracted.
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ICT services business BCX grew revenue almost 3% to R3.5 billion, with an easing global chip shortage helping with product backlogs, partly offset by declines in fixed voice and data by customers migrating to new technologies.
Swfitnet, which manages its portfolio of over 4 000 masts and towers, grew revenue 1.2% to R326 million, with core profit up 1.7%.
"Telkom has started the 2024 financial year with good momentum," said CEO Serame Taukobong in the update.
"Group performance was pleasing in the face of rolling power outages (load shedding), muted economic growth, continuing inflationary pressures on consumers and an intensely competitive landscape,"
"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 [expected bad debt] provisions weighed down on overall group profitability."
"The group will continue improving its cost base to improve profitability in the medium term," he said.
