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Telkom is finally making money on mobile


Once the cause of much consternation at Telkom, the company’s mobile business seems to have turned the corner, pointing to a much healthier Telkom than at the same time last year, as evidenced by the company’s latest set of financial results.

Mobile voice and subscription revenues are up by an impressive 54.7% from R225m to R348m  on the back of a 26.7% increase in the number of active mobile subscribers. Critically there was a 36.5% increase in the amount of contract subscribers and a lower average churn on the prepaid side of the equation. The all important average revenue per user (ARPU) which is used to measure a mobile network’s effectiveness at generating income is up by 22.4% from R58.81 to R71.99 but still far shy of Vodacom’s R125.

It also helps that Telkom is spending less money – down from R815 million to R164 million this year – on building its mobile network. Instead of trying to aimlessly grow its coverage footprint, Telkom is rolling out its LTE-Advanced offering to major metropolitan areas like Parkview as well as providing relief to overly congested areas of the network. Telkom is also in discussion with MTN about taking over the operation of its network as well as extending the current roaming deal to allow MTN customers to access Telkom’s network as well.

All of this means that Telkom managed a profit after tax of R1,2bn for the six months ending in September. Granted it was down from R3bn in 2013, but that figure included a once-off R2.17 billion net gain on the curtailment of its post-retirement medical aid liability as well as early retirement and severance package costs of R325 million.

Once that number is normalised however, profit after tax becomes R1.4 billion up from just R791m in the same period last year showing the tangible improvement that CEO Sipho Maseko has made at Telkom since taking over.

[Source – Sharenet]

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