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Telkom Integrated Report 2017
Performance of
the group
The operating environment
was characterised by uncertain
political, economic and policy
developments. A weak South
African GDP, high levels of
inflation and currency volatility
added pressure to our operations.
Regardless, we remain committed
and hard-working, and responded
to these challenges through
persistent innovation and a
value-driven focus.
We grew operating revenue by
9.8 percent to R41 billion,
benefiting from consolidating
12 months of BCX compared to
seven months in the prior year.
Our underlying group EBITDA was
flat at R11 billion in a 6 percent
inflation environment.
Our Mobile business also
contributed positively with an
EBITDA of R660 million compared
to an EBITDA loss of R43 million in
the prior year. Lastly, we returned
cash to our shareholders, paying
an annual dividend of 422 cents
per share, which is in line with our
dividend policy of 60 percent of
annual headline earnings. This
is 56.3 percent growth in annual
dividend compared to last year’s
annual dividend of 270 cents
per share. I am pleased that
we delivered total shareholder
return (TSR) of 38 percent to our
shareholders.
The operational performance for
the year reflects our approach to
business. We were returns driven
in our allocation of resources,
simplified our processes where
possible, and recruited talented
people with the right skills to help
us in our next phase of growth.
Our Mobile business
has been a star performer in the financial year,
underpinned by increased capital investment, launch of innovative
products such as FreeMe, extension of distribution channels and store
footprint, and initiatives to improve customer experience. The Mobile
business recorded a service revenue of 38.4 percent supported by
a 47.7 percent increase in active subscribers to 4 million. Our mobile
broadband-led strategy continued to pay off with mobile broadband
revenue increasing 49.6 percent to R2.4 billion, driven by a 44.6 percent
increase in mobile broadband subscribers.
The fixed-business
has seen good growth in fibre customers which was
a combination of both migration from asymmetrical digital subscriber
line (ADSL) and new to franchise customers. Even though we are still
experiencing churn in ADSL, this was offset by an increase in demand
for higher speeds and larger uncapped data.
Openserve
made significant inroads to modernise its network, having
passed 2.2 million premises with fibre. This was underpinned by an
increase in investment, improved operational superiority in network
rollout and more streamlined processes. Openserve continues to lead in
the fibre market, providing high-speed network generation broadband
access with over 149 000 kilometres of fibre deployed. Openserve
increased its focus to commercialise its network with connectivity rate
for FTTH increasing from 10 percent in the prior year to 18 percent.
The number of fibre end-point connections to the business and fibre
links to the base stations increased to 52 755 and 5 928 respectively.
The integration of
BCX
is complete. The integrated entity now has a
singular sales team and a unified go-to-market strategy to meet the
end-to-end digital solutions needs of our corporate customers.
The integrated business has the ability to deliver end-to-end digital
solutions to its customers with unmatched data centre capabilities
and a strong network offering. The integrated entity realised synergy
benefits evident in key deals won in the public, banking, financial
services and retail sectors against highly competitive and credible
challengers. These deals would have necessitated striking partnerships
with various entities. BCX strengthened its data centre capabilities to
include Oracle, and launched Cisco Hosted Collaboration solutions and
SAP HANA Enterprise Cloud services.
For detailed performance per business unit refer to page 71 under
productive capital.
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