JSE-listed Telkom on Tuesday posted an improvement in its financial results for the year ended March 31, 2024, supported by its next-generation offerings and cost-optimisation efforts.

The group reported a 5.2% increase in normalised earnings before interest, taxes, depreciation and amortisation (Ebitda) of R10-billion during the year under review, owing to stronger operational performance and cost-optimisation initiatives.

Telkom’s total adjusted headline earnings a share and adjusted basic earnings a share increased 201.3% and 442.8% to 376c and 385.5c, respectively.

“We put great effort into improving cash generated from operations, which increased by more than R4-billion, excluding restructuring costs. Better-than-expected positive free cash flow of R424-million was driven by improved operational performance and our measured approach towards capital expenditure (capex) this year,” said Telkom Group CEO Serame Taukobong.

During the year ended March 31, 2024, Telkom invested R6.1-billion to ensure network resilience, expand its mobile network, modernise its fixed network infrastructure and strengthen its skills and capabilities for information and communications technology- (ICT-) managed services.

This investment included spectrum, which Telkom has deployed to further improve offerings to retail, enterprise and wholesale customers.

Group revenue for the year increased by 1.6% to R43.2-million, driven by an increase in mobile data and next-generation fibre data connectivity revenue of 10.6% and 14.5%, respectively.

“This was partially offset by a 23.4% decrease in fixed-voice revenue owing to the ongoing migration to modern technologies such as fibre and long-term evolution, a 20.7% decrease in customer premises equipment and a 6.8% decrease in mobile handset sales.”

Openserve’s next-generation fibre revenue increased 7.4% to account for 76.4% of the subsidiary’s total revenue of R12.5-billion.

Revenue growth was also driven by a 16.1% rise in next-generation broadband connectivity, or fibre-to-the-home, while the enterprise and carrier segments grew by 4.8% and 2.5%, respectively.

Openserve, which achieved a 6.6% increase in Ebitda to R3.9-billion, invested R2.5-billion to modernise its network and drive fibre deployment, which increased 17% to pass 1.2-million homes. Homes connected increased by 19.8% to 590 527, with a connectivity rate of 48.5%.

Telkom Consumer, meanwhile, reported Ebitda growth of 24.2% to R4.1-billion during the year ended March 31, 2024.

External revenue increased by 2.2% to R26.1-billion, with external revenue from mobile operations up 4.5% to R22.6-billion, driven by 6.8% growth in mobile service revenue.

Mobile subscribers increased 11.9% to 20.4-million, while mobile broadband subscribers increased 9.5% to 12.7 million, representing 62.3% of the total mobile base.

“We invested R2.6-billion in mobile capex, including R972-million for spectrum. This enabled us to expand our network coverage by 2.5%, grow our presence to 7 738 sites, and maintain network resilience by replacing over 5 688 lithium-ion backup batteries and repairing more than 1 606 sites,” said Taukobong, adding that the group also deployed 465 active 5G sites since launching its 5G services in 2022.

Meanwhile, the reported revenue of BCX decreased 2.3% to R12.9-billion after an accounting revision for agent versus principal contracts.

Gross Information Technology revenue increased 11.4% to R8.5-billion, driven by new product deals, software contract renewals, clearing prior-year backlogs in integration services and record cross-border sales, while Converged Communications revenue declined by 14.5% to R5.7-billion as the migration of customers to next-generation technologies continued.

“While BCX reduced some operating costs, this was not sufficient to offset the combined effects of revenue mix at lower margins, the decline in higher-margin legacy revenue and higher expected credit losses on trade receivables,” he explained, further noting a 28.4% decline in Ebitda to R1.3-billion.

Telkom further reported that as Gyro shifted its focus to managing the group’s property portfolio for core operational purposes, optimising the property footprint and improving energy efficiency, the disposal of 56 properties that were no longer required had generated R92-million in cash proceeds.

A further 42 properties with a sale value of R287-million remain in the conveyancing process and are expected to transfer during the 2025 financial year.

Further, progress was made on the proposed disposal of Swiftnet for R6.75-billion, which has been approved by shareholders, Taukobong continued.

“The sale of the masts and towers business will strengthen the group balance sheet and release cash flow for investment. This, together with our healthy operational performance, leaves us well positioned to continue our ambitious growth plans for our mobile and fixed-line connectivity businesses.”

“With the proposed disposal of Swiftnet, our future areas of growth have been brought into focus as we enter our next phase of monetising Telkom's existing and future digital infrastructure as an infrastructure company (InfraCo).”

He highlights the good base that Telkom built during the year to grow as a focused InfraCo, using its mobile and fixed networks and ICT capabilities.

“In the 2024 financial year, we established a good base to grow as OneTelkom, using our extensive digital infrastructure – including our mobile and fixed networks as well as our ICT capabilities. The objective of Telkom operating as an InfraCo is to grow sustainably by pooling our assets and capabilities and going to the market as OneTelkom.”

This, he said, will improve returns on existing and future digital infrastructure, with the company to invest capex in identified growth areas ahead of time to improve future operating profit, cash flow and, ultimately, returns on the capital invested.