Connecting Africa is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

Business of Tech

Telkom SA continues strong mobile growth

Article Image
Telkom South Africa's mobile business has continued its strong growth trajectory, with mobile data traffic growing 81% over the past six months and mobile data revenue increasing by 53.8%, to R6 billion (US$386 million).

Telkom's mobile customers increased by 19% to 13.7 million, with 2.2 million customers added during the period.

This firmly makes Telkom South Africa's third biggest mobile operator, ahead of Cell C which recently saw its customer base decrease by 28% from almost 16.3 million in the first half of 2019 to 11.7 million this year.

Telkom also recorded 23.3% growth in mobile broadband subscribers to 9.6 million, and these subscribers now make up over 70% of all Telkom mobile users.

"We've been really focused on how we grow our data footprint, as that's the significant view we have taken about the future. That is also shown by how data traffic itself has grown in mobile by up to 81%, which is driven by a significant increase of people working from home, and also learning from home," Group CEO Sipho Maseko said during a live-streamed results presentation.

Despite the strong mobile growth, Telkom's overall revenue for the six months ending September 30, 2020 was 0.4% down to R21.4 billion ($1.38 billion) in the face of difficult trading conditions brought on by the COVID-19 pandemic.

However, earnings before interest, tax, depreciation and amortization (EBITDA) grew 6.3%, to R5.9 billion ($379 million), and headline earnings per share (HEPS) were 25.4% up, to 217.5 cents (13.98 US cents), and basic earnings per share (BEPS) grew by 29.5%, to 219 cents (14.08 US cents), as expected, driven by growth in operating profit.

"Telkom's decision to invest in infrastructure ahead of demand enabled us to meet the surge in demand and weather the acceleration of the decline in fixed voice revenue during the national lockdown," Maseko added.

Mobile mega-growth

Blended average revenue per user (ARPU) increased by 36.7% to R113 ($7.26), which is the highest ARPU ever recorded by Telkom. This was mainly due to unprecedented data demand induced by COVID-19.

Prepaid customers also grew 17.9% to 11.1 million with prepaid ARPU increasing by 36.3% to R84. The postpaid customer base increased 24.1% to 2.6 million with ARPU growing 18.6% to R211.

"Our strategy in terms of being a data-led network continues to really bear fruit. If you look at the number of sites that are integrated, that has grown significantly, and leading up to COVID-19, we purposefully had executed a 70% decommissioning of 2G, freeing up the spectrum for LTE utilization and adding capacity to the network. I think that that actually helped us quite a lot to be able to carry the [increased] traffic that we saw in mobile," Maseko said.

Maseko said that temporary spectrum that was assigned by the Independent Communications Authority of South Africa (ICASA) enabled Telkom to be able to carry the increased data traffic.

"On the negative side, because of the lockdown, our network rollout was a bit slow, it was not easy to get our entire supply chain to work in the way that would have wanted. Also, our distribution channels were closed during the lockdown, resulting in slower handset growth," he said.

He did say that Telkom aggressively rolled out fiber backhaul to its towers, which paid off, allowing it to "effect very quick backhaul upgrades at sites where additional traffic was anticipated."

"We also completed the upgrades of the existing mobile core network so that we can be 5G ready; we know that the spectrum will be allocated at some point in the new calendar year. This allows us as Telkom to be able to seamlessly integrate the first 5G sites that we used as commercial pilots in the market earlier on," he said.

Other divisions struggle

While the mobile business flourished, some of Telkom's other sectors were not so lucky and were negatively impacted by the SA national lockdown and economic slowdown due to COVID-19.

BCX and Telkom SMB (which is now called Yep) saw a decline of 11.3% and 25% respectively, driven by a decline in enterprise fixed voice revenues.

The decrease in fixed voice volumes also impacted its wholesale division, Openserve, negatively with revenue declining by 13.6%, a shift driven by a 22.7% decline in fixed voice revenue compared to the prior period.

"Despite this, Openserve maintained the highest connectivity rate in the market through improved fiber to the home connectivity rate from 43.6% in the prior year to 53.8%," the group said.

Property group Gyro's masts and towers revenue increased 7.7% to R628 million ($40.4 million) despite the slowdown in the permitting and construction process due to the national lockdown.

*Top image is of Telkom Group CEO Sipho Maseko (courtesy of Telkom).

— Paula Gilbert, Editor, Connecting Africa

Innovation hub

Story

Hot startup of the month: Nigeria's Tech Herfrica

Connecting Africa's hot startup is Nigeria's Tech Herfrica, a social impact organization that focuses on the digital and financial inclusion of women and girls in rural areas of Nigeria.

Story

Omdia View: February 2024

Highlights in February 2024 in the Middle East and Africa included 5G launches in Senegal and 5G trials in Egypt as well as Kenya's first 5G MVNO. Airtel also launched a new wholesale connectivity business while MTN and Huawei are planning a joint Innovation Technology Lab in South Africa – that and more in this month's Omdia View.

More Innovation hub

Latest video

More videos

Partner perspectives

All Partner Perspectives

Sponsored video

More videos

Industry announcements

More Industry announcements

Upcoming events

Africa Tech Festival 2024
November 11-14, 2024
Cape Town, South Africa
More Upcoming events

Africa Tech Perspectives

Story

Uber's Marjorie Saint-Lot on inclusion and sustainability in Africa

Uber's Country Manager for Ghana and Cote d'Ivoire, Marjorie Saint-Lot, shares how the ride-hailing company is approaching public-private partnerships, environmentally friendly initiatives and gender inclusion in Africa.

Story

The 100 most influential African leaders in 2023

A new report from Africa Tech Festival and Connecting Africa puts a spotlight on the top 100 African leaders in the telecoms and technology sector in 2023.

Story

Deep dive into East Africa's tech startup ecosystem

New survey reveals a lack of access to investors, reliance on international VCs and global recession trends as the biggest barriers for East African tech startups to access funds.

More Africa Tech perspectives

Guest Perspectives

Story

Omdia View: February 2024

By Omdia Analysts

Highlights in February 2024 in the Middle East and Africa included 5G launches in Senegal and 5G trials in Egypt as well as Kenya's first 5G MVNO. Airtel also launched a new wholesale connectivity business while MTN and Huawei are planning a joint Innovation Technology Lab in South Africa – that and more in this month's Omdia View.

Story

Omdia View: January 2024

By Omdia Analysts

Highlights in January 2024 in the Middle East and Africa included a $200 million fintech deal between MTN and Mastercard as well as 5G network trials by Telecom Egypt – that and more in this month's Omdia View.

More Guest Perspectives

Like us on Facebook

Newsletter Sign Up


Sign Up
Tag id test-002