Telkom is getting hammered
Telkom’s share price was hammered following the release of its interim results for the six months ending 30 September 2021.
Telkom’s operating revenue declined from R21.4 billion to R21.3 billion over the reporting period, while its net debt to EBITDA increased from 0.9 to 1.1 times.
Telkom’s fixed-line services were particularly hard-hit. Its fixed lines declined from 1.4 million to 1.1 million, and its fixed broadband subscribers declined from 638,000 to 563,000.
Closer subscribers declined by 30% from 344,000 to 239,000, and its Internet all-access subscribers dropped from 363,000 to 317,000.
Telkom’s business unit, BCX, was also hit hard, with revenue declining by 6.1% to R7.5 billion.
The table below provides an overview of Telkom’s operational data over the reporting period.
It was, however, not all doom and gloom.
Headline earnings per share (HEPS) increased by 30.4% to 285.5 cents, while basic earnings per share (BEPS) increased by 27.3% to 276.8 cents compared to the prior period.
Telkom’s mobile unit performed particularly well. Mobile subscribers increased by 18.8% to 16.3 million, with mobile revenue up 9.7% to R10.4 billion.
“Telkom Mobile continues to optimise the cost to serve as it grows, with the optimisation of roaming expenses contributing to the improvement in EBITDA,” Telkom said.
Telkom’s cost management programme saw operating expenses decline 3.1% year on year, contributing to expanding the EBITDA margin by 0.5% to 28.1%.
“The results attest to the success of our investment strategy and prudent cost management through the volatility of the last quarter,” Telkom CEO Sipho Maseko said.
He added that they remained on track to list their masts and towers business on the Johannesburg Stock Exchange (JSE) before the end of the financial year.
“The listing will affirm the valuation of the masts & towers and contribute to the overall valuation of the Telkom business,” he said.
The positive news was not enough to offset the mediocre set of results and the challenges in Telkom’s fixed-line and business divisions.
Telkom’s share price declined by 10% by Tuesday morning as investors dumped the stock in search of better investments.
The chart below shows Telkom’s share price following the financial results announcement this morning.
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