- Telkom's share price fell more than 7% on Monday morning after the company's quarterly trading update showed a revenue decline.
- Telkom's struggling IT business, BCX, faces additional pressure from the global shortage of semiconductor chips.
- Its postpaid customer base remained "relatively flat" at 2.6 million.
Telkom's share price fell by more than 7% to R46.50 on Monday morning, after the company released a trading update for the quarter to end-December.
Despite growth in the mobile and broadband business, group revenue dipped by 2.3% year-on-year to R10.7 billion for the quarter.
Revenue in the mobile business and the Masts and Towers business (Swiftnet) edged 4.9% and 4.6% higher, respectively. Telkom plans to spin-off its Masts and Towers division, with a separate listing in the JSE in the upcoming months.
However, the growth was offset by challenges in its IT business, BCX, and the legacy fixed-line business.
"The legacy fixed business continues to decline, although the rate of decline has slowed down from the double digit decline we saw in the prior year to 7.1%," the company said.
"In addition, the IT business remains challenged due to the lingering impact of Covid-19 and the global shortage of chips which led to BCX being unable to fulfill backorders for IT hardware in the first nine months of the financial year."
Mobile business
Quarterly mobile data traffic increased by 7.9% year-on-year, but mobile service revenue only grew 2.3% year-on-year to R4.3billion.
While it saw 10% growth in subscribers, which pushed active customers to 16.4 million, the postpaid customer base was "relatively flat" at 2.6 million. Postpaid average revenue per unit (ARPU), which is the indicator of the amount of money generated from each subscriber, rose only 1.8% to R215.
"Given the challenging macro-economic environment, postpaid consumers are becoming more cost savvy and are continuously searching for ways to manage and reduce their spend, resulting in real growth only emanating from the prepaid market," said Taukobong.
CEO Serame Taukobong said Openserve, the operator's wholesale broadband business, continued with its growth trajectory in the fibre market. The number of homes it connected with fibre rose by almost 39% to 358 528 year-on-year.
Telkom launched Openserve business unit in 2015, as it separated its wholesale and retail divisions, a move which allowed it to play a meaningful role in the lucrative internet business.