Telkom, the South African telecommunications company, recently released its interim results for the period between 1 April and 30 September 2022. The company reported a significant increase in after-tax profits, demonstrating its strong performance during this period.
According to the report, Telkom’s after-tax profits surged by an impressive 52.3%, rising from R641 million to R976 million.
When considering only its continuing operations, Telkom’s after-tax profit increased by an even higher margin of 61.8%, reaching R788 million compared to R487 million in the same period last year.
While Telkom experienced remarkable growth in profits, it also made strategic decisions to manage its capital expenditure.
The company reduced its capital expenditure by R546 million during the reporting period. Despite this reduction, Telkom still invested R3.1 billion into its networks, showcasing its commitment to infrastructure development.
Overall revenue for Telkom increased by 2.5% to R21.8 billion, and its earnings before interest, taxation, depreciation, and amortisation (Ebitda) rose by 1.7% to R5 billion. However, Telkom stated that its Ebitda growth was limited by higher bad debt provisions.
One of the key drivers of Telkom’s revenue growth was its mobile service segment, which saw a 5.8% increase to R9.3 billion. Additionally, Telkom experienced a substantial increase in free cash flow, which rose by 130.4% to R573 million.
Telkom CEO, Serame Taukobong, highlighted the company’s focus on cash generation and the importance of cost savings in driving profitability.
He stated, “In the first half of FY2024, we prioritised driving cash generation by harnessing operational expenditure savings, managing working capital, and focused on capital expenditure for growth and maintaining the availability of our fixed and mobile networks.”
Taukobong also emphasized Telkom’s success in its fiber business and IT segment. The company witnessed sustained growth in its fibre business, driven by monetizing fibre rollouts.
Additionally, Telkom experienced significant growth in its IT business, fueled by increased demand for hardware and software from enterprise customers. Despite the challenging macro-economic environment, Taukobong expressed confidence in Telkom’s future performance.
He stated, “Our guidance for FY2024 remains unchanged. Group revenue and Ebitda are expected to grow at low to mid-single digits as we focus on driving the top line and harnessing cost savings to improve our profitability by FY2025.”
To support its growth trajectory, Telkom plans to continue investing in its infrastructure. The company expects the capex-to-revenue ratio to be on the lower end of its 16% to 18% guidance for FY2024.
Finally, Telkom’s interim results demonstrate a strong financial performance, with a significant surge in after-tax profits. The company’s strategic focus on cash generation, cost savings, and infrastructure investment positions it well for future growth and profitability.