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Telkom says its data-led strategy and expansion into underserved regions should keep earnings growing in the 2027 financial year, after the group delivered a strong first-quarter performance despite ongoing weakness at its IT services subsidiary BCX.
The telecommunications group reported a 2.6% increase in group revenue to R11.1bn for the three months ended June 30, supported by an 8.8% rise in data revenue to R6.9bn. Data now contributes 62.4% of total group revenue, up from 58.8% a year ago, as mobile and fibre services offset declines in traditional fixed-line revenue.
Group earnings before interest, tax, depreciation and amortisation (Ebitda) climbed 10% to R3.08bn, while the Ebitda margin expanded to 27.7% from 25.9% a year earlier as cost-cutting measures helped reduce total operating expenses by 1.9%.
CEO Serame Taukobong said Mobile and Openserve remained the key drivers of growth.
“We commenced the new financial year with strong data-led growth supported by Mobile and Openserve,” Taukobong said, adding that the group’s OneTelkom strategy and cost-discipline initiatives continued to support earnings growth.
Telkom’s mobile business delivered particularly strong growth, with service revenue rising 6.4% and prepaid service revenue increasing 9.1%. Mobile data revenue climbed 11.4%, while data traffic surged 19.6% during the quarter.
The group’s total mobile subscriber base grew 6.1% to 25.3-million, driven by a 7.1% increase in prepaid customers. Data subscribers rose 15.5% to 19.8-million and now account for 78.4% of the total mobile base.
Telkom said its regional expansion strategy was gaining traction, with revenue from non-metro areas growing at double-digit rates as the company increases its presence in under-served and under-indexed markets.
Openserve, the group’s wholesale infrastructure business, increased revenue by 5.6%, while external revenue jumped 18.2%. Fibre-related data revenue rose 6.6% and Ebitda increased 6.7%, lifting the division’s Ebitda margin to 33.2%. Openserve’s fibre connectivity rate improved to an industry-leading 53.9% after homes connected increased 16.6% to 843,563.
Telkom said Openserve’s recently launched internet service provider would provide an additional channel to boost fibre adoption and improve network utilisation.
BCX remained a drag on overall growth, with revenue declining 10.9% as demand for IT hardware, software and converged communications services stayed weak. However, the business recorded encouraging growth in higher-margin digital services, with cybersecurity revenue increasing 36.6% and cloud services revenue rising 11.8%.
Looking ahead, Telkom reaffirmed its medium-term guidance and said mobile service revenue is expected to grow in the mid-single digits, potentially above the upper end of its target range. The group also expects Ebitda growth to continue outpacing revenue growth as efficiency measures take hold.
While management cautioned that BCX’s turnaround will take time, it expects a gradual recovery in hardware and software sales later in the financial year, provided global supply-chain disruptions linked to geopolitical tensions ease. The division will continue to focus on cloud, data and artificial intelligence capabilities as enterprise demand for AI-enabled solutions increases.
TimesLIVE
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