Telkom South Africa on Monday reported an 18.3% increase in adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) from continuing operations to R5.61-billion during the six months ended September 30, 2024.

This excludes a restructuring cost of R160-million and the Telkom Retirement Fund derecognition loss of R618-million.

The group’s adjusted Ebitda margin improved to 26.2%, 3.6 percentage points up on the prior comparative period.

On a reported basis, Ebitda increased 2.1% to R5.13-billion during the interim period under review.

Telkom further reported a strengthening in the balance sheet, with free cash flow turning positive at R768-million, compared with the negative R478-million reported in the previous comparative six months.

Interest-bearing debt reduced by R885-million and the net debt to adjusted Ebitda ratio improved to 1.3x from 1.8x at year-end.

“The results demonstrate robust and steady underlying operational performance, delivering sustainable financial returns while positioning the company as the backbone of South Africa's digital future,” said Telkom Group CEO Serame Taukobong.

“Our continued investment in our extensive fibre network and mobile infrastructure is now delivering the competitive advantage we anticipated, propelling our data-led strategy to ensure future-readiness.”

During the six months ended September 30, 2024, group revenue from continuing operations increased 1.9% to R21.38-billion, driven by continued strong demand for data propositions, with mobile service revenue growing by 10%, fibre data service revenue increasing by 15.5% and IT services revenue up by 1.9%, offsetting ongoing fixed-voice and legacy data erosion.

Mobile subscribers increased 24.6% to 22.7-million, while mobile data subscribers increased by 19.6% to 14.6-million, with associated data revenues increasing by 12.7%.

The group also maintained a high home connection rate of 49.7% for the period under review, as homes passed by Openserve’s fibre infrastructure and connected grew by 11.4% and 18.1%, respectively.

“Our improved cash generation and strengthened balance sheet position us well to continue investing for future growth while maintaining financial discipline,” said Telkom Group CFO Nonkululeko Dlamini.

“We continued with smart capital spend of R2.5-billion invested in infrastructure, which is at the heart of our strategy. The capital intensity ratio of 11.9% remains efficient and in line with our forecast of 12% to 15%,” she said.

Telkom continues to optimise its asset portfolio, making progress in the disposal of noncore assets while focusing on high-growth areas.

The Competition Tribunal approved the disposal of Swiftnet on September 3, 2024, marking another significant milestone. Telkom is awaiting regulatory approval for the licence transfer.

Telkom aims to maintain the good momentum into the second half of the year, driving sustained growth, said Taukobong.

“Looking ahead, the strength of our balance sheet remains a top priority, ensuring that we stand resilient in the face of challenges. We will endeavour to maintain into the second half of the year the good momentum we have experienced so far, which is pointing towards a sustained trend of positive free cash flow. It is important to emphasise that our focus on efficiency drivers is not solely about reducing workforce numbers but rather about optimising performance across the board. We are actively reshaping the business construct without compromising our core strengths.”