- Telkom suffered a R10 billion loss over the past year, hit by restructuring costs, impairments as well as load shedding.
- Its total market value is now less than R16 billion on the JSE.
- The group’s legacy and fixed-line business remain under pressure.
- For more financial news, go to the News24 Business front page.
SA’s third-biggest mobile operator Telkom warned it wouldn’t pay dividends for a fourth year, believing it prudent to first strengthen its balance sheet after suffering an annual loss of about two-thirds of its market value.
Telkom, valued at about R15.7 billion on the JSE, reported a R10 billion loss in the year to end-March – from a profit of R2.6 billion previously. Hefty impairments, restructuring costs and load shedding hit the company. More pleasingly, active mobile subscribers grew 7.8% to about 18.3 million.
Revenue grew 0.9% to about R43 billion, driven by almost 14% growth in its IT business. But its wholesale infrastructure business Openserve reported a 26% fall in fixed-line revenue, and a more than 30% fall in legacy data revenue.
Openserve, along with Telkom Consumer – which includes its mobile and internet service units – were also subject to a R13.2 billion non-cash writedown, a reflection of technological changes, weaker economic conditions, and the fact the company’s shares have been trading below their net asset value for a significant period of time. Telkom had also written down its copper assets in 2013 by about R12 billion. Its fixed-line internet subscribers fell about a fifth in 2023, with fixed broadband subscribers down almost 3%.
Telkom, which has about 11 600 employees, says 1 700 employees either accepted voluntary early retirement or severance packages, adding to R1 billion in restructuring costs in 2023.
Telkom had suspended dividends for three years, with 2023 meant to be the final year, but said on Tuesday it would not be paying a dividend in 2024 either.
“The year was characterised by unprecedented levels of load shedding, constrained consumer spending, and dynamic competition against the backdrop of a sluggish economy with persistent inflationary pressures,” CEO Serame Taukobong said.
“As we continued to manage the transition to next-generation technologies, group performance was under pressure from a pronounced reduction in legacy revenues for the year.”
“Despite this, revenue grew marginally. However, the incremental costs of load shedding reduced overall profitability, notwithstanding our efforts to manage operating costs.”
While Telkom is trying to cut costs as part of its turnaround, the group is also looking to sell some of its businesses.
It received non-binding bids for its mast and towers business, Swiftnet, but none met its criteria to be considered an asset held for sale in 2023.
The company has also “received numerous credible expressions of interest from a range of suitable local and international partners” for its fibre internet business Openserve.
On Monday, Telkom shares rallied after it confirmed it is in the sights of a consortium led by former CEO Sipho Maseko and comprised of Axian Telecom and the Public Investment Corporation (PIC).
READ | Telkom lifts 9% as it confirms it received bid from consortium including PIC
The Sunday Times reported at the weekend that Telkom received a bid in March from Maseko’s consortium of R46 per share – a more than 50% premium to its share price as of Monday’s open – but that talks continue. Bloomberg had previously reported the consortium may take a just over 50% stake in Telkom.