The South African telecommunications giant Telkom has disclosed its financial results for the quarter ending June 30, 2024. The company reported a revenue increase of 3.9%, reaching R10.9 billion (equivalent to $587.2 million). Additionally, there was a notable 14.6% growth in the number of mobile subscribers, with the total count exceeding 21 million.
Revenue Growth Driven by Next-Generation Network Services
The 3.9% uplift in group revenue to R10.9 billion was primarily driven by the heightened demand for Telkom’s next-generation network (NGN) services. This growth was spearheaded by a 9.5% surge in mobile service revenue, a 7.1% climb in fixed data NGN revenue, and a significant 10.3% increase in information technology revenue.
Leadership Remarks
Serame Taukobong, the Group Chief Executive Officer, expressed satisfaction with the company’s performance, stating, “Telkom had a good start to the financial year with a pleasing performance on the top line benefiting from our data-led strategy and compelling value propositions.”
He further elaborated, “Our next-generation revenue streams continued their positive momentum and grew by R576 million, an increase of 7.0%. NGN revenues now comprise 80.7% of Group revenue.”
Mobile Subscriber Growth
A critical component of Telkom’s robust performance was the 14.6% rise in its mobile subscriber base, which now stands at 21.2 million. The company highlighted that its focus on a data-centric business model, including the expansion of its mobile and fibre offerings, has been instrumental in driving this success.
Mobile Division Performance
Telkom’s mobile division experienced a surge in revenue, with external mobile service revenue climbing by 9.5% to reach R4.9 billion (approximately $268.99 million). The total external revenue of the group also saw an increase, rising by 5.3% to R5.9 billion ($308.9 million).
Data Services Demand
The demand for data services remained robust, as evidenced by a 25.8% increase in mobile data traffic and a 33.0% rise in fixed data traffic compared to the previous year. Additionally, Telkom reported substantial growth in its ‘beyond connectivity’ offerings, with revenues hitting R407.5 million. This growth was largely fueled by the popularity of the airtime advance product, which saw a 32.3% year-on-year increase and now represents 32.9% of the total recharge value.
Decline in Voice and Legacy Services
Despite the growth in next-generation network (NGN) services, Telkom observed a 2.4% year-on-year decline in overall revenue, which amounted to R3.056 billion. This downturn was mainly due to a significant 28.4% (R188 million) decrease in voice and legacy service revenues.
Strategic Divestment of Swiftnet
In a strategic move earlier in the year, Telkom divested its Swiftnet masts and towers business for R6.75 billion ($355.4 million) in March 2024. This sale is indicative of Telkom’s strategy to strengthen its financial standing by reducing debt and improving liquidity.
Competition Commission Approval
On August 1, 2024, the Competition Commission (CompCom) of South Africa announced its approval of the acquisition of Swiftnet by TowerCo. The CompCom concluded that the transaction is unlikely to hinder competition within the market, thereby greenlighting the deal.