Big Telkom earnings boost on back of load-shedding miracle – MyBroadband

Telkom released a trading update for the quarter ended 30 June 2024, revealing that reduced load-shedding costs significantly boosted earnings before interest, tax, depreciation, and amortization (EBITDA).

Telkom Consumer EBITDA increased by 28.4% to R1.20 billion, while Telkom Mobile saw EBITDA grew by 35.7% to R1.54 billion.

This was coupled with EBITDA margin growth of 3.6 percentage points year-on-year for Telkom Consumer, and 6.0 percentage points year-on-year for Telkom Mobile.

It attributed the performance to solid revenue growth and careful cost containment initiatives.

Telkom’s wholesale fibre division, Openserve, also saw strong EBITDA growth thanks to a R128-million decrease in diesel expenditure.

“In addition to our network consolidation and simplification strategy, Openserve continued to execute on improved green energy mix through the deployment of lithium-ion batteries and solar energy solutions together with an improved diesel delivery model,” said Telkom.

It said these initiatives, together with technology upgrades and infrastructure at critical locations, coupled with the improved stability of the national grid, meant Telkom only spent R23 million on diesel during the quarter.

This was down 84.6% from R151 million in the same quarter last year.

Telkom said the cost efficiency initiatives resulted in EBITDA growth of 16.8% to R1.02 billion and EBITDA margin growth of 5.5 percentage points year-on-year.

Eskom has performed somewhat of a miracle in early 2024, having suspended load-shedding on 26 March 2024, and the suspension has remained since.

The state-owned power utility has been steadily increasing its energy availability factor (EAF) through its generation recovery plan, and this combined with reduced demand from solar rooftop generation has made the load-shedding break possible.

However, former Reserve Bank deputy governor Kuben Naidoo believes load-shedding could return if South Africa’s mining industry increases production.

“My personal view is that half of the reason we don’t have load shedding is because the mining sector is in a deep recession,” said Naidoo.

This is due to lower demand for commodities and increased input costs in the centre, which have hampered productivity. This results in lower production and lower energy consumption.

However, Naidoo believes load-shedding will return if South Africa “switches on” the mining sector.