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Open serve  

Openserve is South Africa’s leading wholesale infrastructure connectivity provider with the largest open-access network across South Africa.

The pricing transformation journey that Openserve embarked on two years ago is starting to bear fruit, with the rate of decline in revenue slowing down. Despite the price reductions and ongoing pressures in our voice revenue, our overall revenue declined by only 2.9 percent while data traffic grew massively in our network.

This supports our strategy to commercialise our network. The fibre revenue from the entire ecosystem (fibre to the home (FTTH), business, base stations, Megalines and Metro Ethernet) continues to grow.

However, the change in product mix from traditional to new technologies has lower margins, thereby driving us to grow our data volumes and the number of fibre lines to compensate for this change.

Revenue declined by 2.9 percent to R17 570 million, as we are making headway with our commercialisation strategy. This commercialisation is paying dividends in the fibre ecosystem with the fibre to the home connectivity rate accelerating to 30.7 percent within three years of deployment, compared to 18.0 percent in the prior year. The fibre-based Metro Ethernet customer lines cater to the growing demand for data in the enterprise market. We now have 89 818 end points terminating at businesses – a
70.3 percent increase from the prior year. Fibre to the base stations increased by 14.6 percent to 6 791 base stations.

EBITDA decreased 2.4 percent to R5 914 million on lower revenue, which was offset by a slight saving in operating expenditure due to improved efficiencies from transforming our network.

As part of our multifaceted strategy of modernising, commercialising and transforming our network, we invested R4 728 million to futureproof our core, transport and access footprint. Our investment in our last-mile access1 enables us to provide broadband of up to 200 megabits per second (Mbps). Based on this network foundation, we increased our minimum fixed-line broadband connectivity speed to 4 and 10 Mbps where applicable. We did this as part of our continuous drive to stimulate the digital economy and enable high-speed internet access.

We have deployed more than 157 400 km of fibre nationally, connecting over 2.5 million premises – we are the leading provider of high-speed next generation broadband access. The investment in next generation access enabled us to provide high-speed access across our fibre and copper networks and continues to drive diverse long-term investment in broadband connectivity. Capital investment continues to underpin the data-driven ecosystem, focusing on operational efficiencies and growth areas which include Metro Ethernet, fibre to the home and POTN. POTN establishes an IP-enabled optical transmission capability that scales to meet the demands of the Fourth Industrial Revolution. It increases speed and capacity, lowers latency and digitalises the network fabric. POTN works across national and regional fibre routes, enabling the deployment of fibre-based access, enterprise and backhaul technologies, such as gigabit passive optical network for FTTH and Metro Ethernet, for enterprise and mobile backhaul. Our capital investment across core and aggregation will enable us to deploy one Tbps throughput within the next 18 to 24 months, creating a futureproof network that is ready for exponential growth in data consumption. Fibre deployment remains a key future enabler for end-user connections, as well as small cells in mobile networks.

1 The technology that carries signals from our infrastructure over the final stretch to an endpoint.

Telkom Consumer  

Telkom Consumer offers fixed and mobile broadband, is an internet service provider and is a converged communications provider.

Telkom Consumer’s performance was driven by the mobile business, which was underpinned by our capital investment in wireless network, extension of distribution channels, increased store footprint and innovative data-led products which resonated well with customers. Our mobile service revenue grew by approximately R1.7 billion.

The fixed business turnaround is progressing well following the launch of innovative fixed-broadband products (led by the Unlimited product suite as well as customer speed upgrade migrations) and content offerings, notwithstanding the continued churn in the lower end of traditional products. The number of Consumer broadband subscribers stabilised in the last two months as the unlimited, uncapped products continue to gain traction.

Telkom Consumer’s revenue grew 5.9 percent to R17 157 million, driven by a 47.2 percent growth in mobile service revenue, which was offset by a 6.5 percent decline in the fixed residential business. The impressive growth in the mobile business was supported by 30.2 percent growth to 5.2 million subscribers with the blended ARPU increasing by 10.2 percent to R98.19. Post-paid subscribers increased by 20.5 percent, adding more than 250 000 subscribers to reach 1.5 million subscribers. 30 percent of our post-paid subscribers have adopted the FreeMe product suite as their base plan, contributing to a 5.8 percent increase in post-paid ARPU to R191.90. Pre-paid subscribers increased 34.6 percent to 3.7 million, with the ARPU increasing by 21.4 percent to R59.62, benefiting from an expansion of our fixed wireless LTE smart offerings to the pre-paid segment. To achieve a quality service network offering and to broaden our coverage domain, we rolled out 988 integrated sites in FY2018. We now have 3 974 sites, of which 2 333 were upgraded to LTE sites to further drive our wireless nomadic broadband product, SmartBroadband.

Mobile data was a major contributor to revenue with a 56.3 percent growth, supported by 124 percent growth in data usage. The re-farming of our 1800 MHz spectrum is paying dividends with smartphone subscribers increasing by 43.9 percent to 2.8 million. Our nomadic wireless LTE smart broadband offerings continue to do well with an increase of 194 percent in LTE subscribers to over 500 000, driven by our popular “deal of the month”, improved quality and the footprint expansion of our LTE network.

We are seeing significantly more fibre customers, albeit from a low base, driven by an increase in new-to-franchise businesses and the migration of DSL customers to fibre. We have also migrated a large portion of the fixedbroadband base to higher speeds of 10 Mbps – the base increased year on year by 25 percent. Our content offering LIT video, music on mobile and LIT TV streaming device for fixed-broadband is gaining momentum. Sales for FreeMe recurring data bundles have steadily increased since the introduction of LIT services on the 2 GB and higher services. We have strengthened our position in the content space by also offering a gaming option. We seek to stimulate broadband growth through the broadband services consumers need for video and entertainment. We drive broadband growth by offering online video games hardware, software and accessories. To expand into the gaming sphere, we have partnered with SuperSport, FIFA, Logitech and Orlando Pirates. We hosted the largest e-football festival in Africa and are the first to bring Comic Con to Africa.

Telkom Consumer’s EBITDA loss improved by 54.9 percent against a backdrop of increasing overall revenue and an expanding mobile business. Our ongoing drive to realise operational efficiencies has begun to bear fruit. Our expenses reduced marginally by 0.2 percent year on year thanks to our focus on key metrics, build-up of distribution and network footprint and ancillary efficiency gains through driving scale. The mobile business continued on a positive trajectory with EBITDA (before transfer pricing) improving by 164 percent to approximately R1.7 billion.


BCX is a leading technology company that provides ICT solutions and an integrated portfolio of technology solutions across South Africa.

The weak economy led to deferred corporate ICT spend and reduced public sector spend, which hampered BCX’s performance. BCX was also impacted by the decline in voice revenue, as enterprise customers migrated from circuit voice to VoIP, as well as pricing pressure.

Consequently, BCX remained commercially competitive to retain customers amid intense competition. Going forward, we expect the economy to recover but investment by customers to lag.

We have implemented strategies to manage the voice revenue decline while we migrate customers to VoIP and grow our new generation revenue streams.

Revenue declined 4.6 percent to R21 167 million, mainly due to the weak economy and the decline in voice revenue. BCX services all business sectors including key verticals, such as retail, mining, industrial, financial services and public sectors – all of which are under pressure from the stagnant economy. South Africa’s improving sentiment has not yet seen an increase in spend in the ICT industry. However, the improving outlook bodes well for the future. We see enterprise customers migrate from circuit voice to VoIP and an intense competitive environment.

Our strategy is geared towards managing the decline in voice revenue, particularly from our top 100 customers, and towards selling end-to-end communications offerings while we focus on growing new generation revenue streams such as cloud computing; expanded analytics consulting and solutions services; and cybersecurity. We appointed a chief revenue officer and chief digital officer to drive new generation revenue opportunities and build digital consulting capabilities respectively.

BCX Insights is our platform to build our data science and analytical capabilities as well as actively engage with customers. We have begun rationalising and optimising the data centre estate to provide leading managed services and private and hybrid cloud solutions.

Within BCX Smart, we have begun to consolidate our products and skill sets in IoT and go-to-market with a clearer, multi-sector value proposition.

BCX Secure is a cybersecurity business that will form strategic alliances with leading global players, invest in automation and leverage artificial intelligence capabilities.

BCX’s EBITDA declined by 8.1 percent with an EBITDA margin of 17.7 percent on lower revenue. BCX responded to the challenges with effective cost management which resulted in 4.1 percent savings in operating expenses. This is despite an increase in employee expense as we employ new skills and talent to drive BCX’s growth. Some of the cost management initiatives included centralising the shared services function with optimised procurement processes, to take full advantage of the scale of BCX’s operations.

BCX’s legal integration with the enterprise business was completed in the prior year, providing BCX with greater access to South African blue-chip ICT consumers in the public and private sectors. We have actively pursued cross-selling opportunities as avenues for future revenue growth. We focused on the business portfolio review of the 34 legal entities in BCX and the reorganisation of senior management. This included a number of key appointments in the sales and operations area to improve focus on service delivery. The business portfolio review is on track – South African subsidiaries’ integration into “One-BCX” is progressing according to plan, and is driving efficiencies within BCX.


Gyro is responsible for managing the masts and towers, property development and property management services on behalf of the group.

Gyro was established on 1 April 2017 as a separate legal entity. A CEO was appointed to commercialise the property portfolio; extract value from excess building capacity; and diversify income streams through property development, masts and towers, and property management services.

Following the acquisition of approximately 6 500 masts and towers from Telkom, Gyro focused on developing a commercialisation plan to convert the portfolio to a real estate investment portfolio. This entailed leasing out space in the towers to generate annuity rental income. Approximately 1 300 or 20 percent of the masts and towers portfolio has multiple tenants (co-location), which represents an external revenue stream. During the year, we grew our co-location revenue from external customers by 9 percent to R539 million supported by a 9 percent growth in the number of external tenants to 2 581. The improvements were driven by proactive customer engagement, co-location process re-engineering and adhoc recovery of inactive, traditional requirement to create capacity to meet market demands.

We proactively engaged with key clients to discuss their future network requirements and market penetration plans. We established a New Build programme to increase the tower portfolio and will address new location demand. We are assessing the requirement for high-location densification to adequately service higher frequency (4G and 5G) networks. To this end, we will develop new build pipelines featuring small cell towers that will be closer to one another. This will enable us to service our clients more effectively and should enhance our competitiveness as the largest independent tower company in South Africa.

We will continue to explore and deploy the latest technology to reduce development cost and maximise our development yield while offering competitive rental levels to clients. Gyro manages Telkom’s property portfolio, which consists of 1 440 properties, including exchange and switch, office, client service centre and centre for learning buildings as well as residential dwellings and land parcels. The main objective is to unlock value in the non-core properties and generate sustainable rental income, profit from development sale, and increase the net asset value of the portfolio.

We focused on redevelopment concepts and commenced with town planning activities for properties in the Gyro portfolio. We will continue development planning for the properties in the Gyro portfolio and non-core properties in the group portfolio that are in prime locations and are suitable for redevelopment. We will also focus on asset management strategies for each property to ensure that operating budgets are aligned with the investment strategy to optimise operating expenditure efficiency levels. We are exploring development funding options to maximise return on investment and minimise risks. We continue exploring strategic partnership opportunities with experienced developers while executing development projects in a socially responsible and environmentally sustainable manner.

Yellow Pages  

Yellow Pages is a local advertising and marketing company that provides services and digital solutions to local businesses. Yellow Pages’ business units operate in South Africa and Namibia.

As the world moves towards digital media, so has Yellow Pages. We are expanding our offerings beyond traditional print to digital listings, websites, social media advertising, digital agency services and e-commerce capabilities.

As the print business is under increasing pressure, we have actively started the journey to transform into a digital-focused business. The first step was rebranding Trudon to Yellow Pages. This allowed us to leverage the brand’s proud heritage and strong reputation. The modernised Yellow Pages identity, which showcases our digital capabilities and agility in innovation, was launched in March 2018. The business continues offering a comprehensive range of advertising solutions for the SME business segment. Global trends indicate that online consumer purchases will increase. Therefore, Yellow Pages has begun developing propositions that will allow SMEs a cost-effective manner to engage with their customers online.

The traditional core product, comprising the Yellow and White Pages directories, was also enhanced to provide online omni-channel capabilities such as queues, quotations and bookings. When these are combined with the benefits of Yellow Pages, hyperlocal business data improves lead generation and lead closure for SMEs.

Continued focus on e-commerce marketplace platforms has led to the launch of the new Yellow Pages app, previously known as Yapp. The app incorporates chat functionality for instant communication between customer and service provider. The app’s functionality was expanded to accommodate bookings, quotations and invoicing, thereby aligning it with the Yellow Pages desktop offerings. The uptake has been positive with approximately 16 000 downloads since the launch in February 2017.

Yellow Pages continues evaluating the ability of solutions deployed in the market to scale, given the rapid rate of change in the Wi-fi market. We discontinued the Mobile Adxchange product and focused on e-commerce marketplace offerings. In line with e-commerce trends, the business moved away from cost comparison towards deals. Aligned to this, the “Big Deals” platform was launched in October 2017, providing consumers with access to discounted prices on a range of products, leveraging the cost effectiveness of online channels. This platform will also provide vendors with a platform to market distressed stock and will be a cornerstone for a loyalty programme.

OTT partnerships are key to providing our customers with best-in-class value-added services. We continue to be a premier SME Google partner, outlining our expertise in providing SMEs a variety of Google products and insights. The Insync digital presence management platform, which is powered by Yext, has more than 5 400 active customers since the launch in March 2017. Webcard, the affordable digital mobile website solution, which showcases our partnership with Web.com Group, has achieved over 6 300 webcards activations since the launch in August 2017. We are an exclusive partner for the Camilyo web development suite, which provides Yellow Pages the ability to rapidly deploy mobile optimised websites at scale.