Home

Telkom reports decline of 66% in headline earnings

Reading Time: 3 minutes

Local Telecommunications Company, Telkom, has reported a more than 66% decline in headline earnings. The Group says this is as a result of a decline in fixed voice and the impact of COVID-19 on the business.

The company’s Group CEO Sipho Maseko says earnings were also affected by their restructuring programme. Maseko says they expect further falls in earnings as the impact of COVID-19 is yet to be felt.

The Group’s revenue grew 3% to R43 billion despite a 22% decline in fixed voice revenue.

Maseko says their restructuring program also had a negative impact on profits.

“We took a big charge in terms of paying people who had taken early retirement and severance packages. We also took a much higher provision in anticipation of COVID-19 related expected credit losses. They have not materialised yet, but we are taking a higher charge. And thirdly, we paid a higher tax compared to what we paid before. So, the EBIDA (Earnings before interest, depreciation and amortization) is broadly flat at around 3% and our mobile business is growing,” says Maseko.

The CEO says they have seen pressure from their fixed voice business and they will be focusing on mobile and information technology infrastructure.

“The fixed voice business is a business that has been with us for many years and it has served us well. Unfortunately, voice itself is now being substituted by data and that is why most of the areas of investment we have been making over the last couple of years were in the area of data. Whether it’s fixed data or mobile data. We have invested in fibre and fibre-roll out,” says Maseko.

The Group says they do not envision job cuts for now, but are looking at becoming more efficient.

“The economy is in decline and COVID-19 is having a devastating effect on the economy. Competitiveness needs to remain and in this Telkom business, it’s bizarre because the pressure is how much more can we bring data prices down and with all of these pressure points, we constantly need to look at how efficient we can become,” says Maseko.

Telkom says they will be increasing the size of their data bundles and are already offering data at a low cost. Consumers can now purchase uncapped ADSL data for as little as R299 a month. They are also making other fixed value prepositions and are increasing the quality of their broadband across the country.

Author

MOST READ