by Tech Talk | Nov 24, 2022 | Articles
Telkom is to rein in spending to cope with rising costs after reporting a 17.9% fall in half-year core profit.
The partially state-owned operator joins local rivals such as Vodacom in stepping up cost-cutting initiatives as rising costs for fuel, handsets and equipment and for servicing its rapidly growing network puts pressure on core profit.
Group earnings before interest, tax, depreciation and amortisation (Ebitda) fell to R4.9-billion in the six months ended 30 September, while group operating revenue slipped by 0.7% to R21.2-billion.
Telkom, whose mobile business is the third largest in the country, behind Vodacom and MTN, faced increases in direct costs, driven by materially higher handset and equipment costs, group CEO Serame Taukobong said.
“While the rest of the operating costs were well managed, energy costs increased significantly due to the sustained load shedding during the period,” Taukobong added.
“If you look at our cost to revenue ratio going up to 78.7%, we do need to look at cost-cutting initiatives,” chief financial officer Dirk Reyneke told investors. “In terms of our cost lines, there are no sacred cows. We will look at every single line and say where are the opportunities.”
In the medium term, Telkom expects revenue and Ebitda to grow at low to mid-single digit percentages, from mid-single digit growth.
“Given the material increases in the cost of sales for Telkom Mobile, the accelerated decline of the legacy business at Openserve, BCX and Consumer, plus the impact of load shedding, we are revising our guidance,” Reyneke said. — Reuters
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by Tech Talk | Nov 24, 2022 | Articles
Telkom’s chairman, Sello Moloko, has resigned and will leave the board of the partially state-owned telecommunications operator by no later than 31 March 2023.
The company cited Moloko’s heavy workload for his decision to step down.
His exit comes after a report earlier on Wednesday said Moloko had been urged by the Reserve Bank’s Prudential Authority to step down to focus his attention on Absa.
Business Day, citing sources with knowledge of the matter, said Moloko (paywall), who took the reins on Absa’s board in April from Wendy Lucas-Bull, said Telkom board had considered appointing Mteto Nyati as chair. Nyati, a former CEO of Altron and MTN South Africa, recently acquired a 40% stake in business technology consultancy BSG.
Moloko was appointed as Telkom board chair in 2019. He joined the board of Telkom in 2018 as an independent non-executive director.
“The board has commenced the process to identify a suitable replacement [to Moloko],” Telkom said on Wednesday. – NewsCentral Media
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by Tech Talk | Nov 18, 2022 | Articles
Telkom has announced the handover of its video and audio streaming platform TelkomONE to the South African Broadcasting Corporation (SABC) effective on 17 November 2022.
Telkom and the SABC have had a successful partnership since the launch of TelkomONE in late 2020. The platform has now matured and ready to scale under the management of the SABC’s broadcasting expertise. “Their expertise in sourcing and curating relevant content will enrich the current content library for existing and new customers, said Telkom CMO, Gugu Mthembu.
The broadcaster will migrate all TelkomONE’s existing customer base. Subscribers will be notified and transferred to the new SABC platform at launch.
“We will continue to evolve to our digital lifestyle provider ambition through our investments in areas such as content, fintech, gaming and IoT by partnering with strategic partners to deliver products and services that create a better life for our customers”, she concluded.
Existing Telkom One Amp customers with active subscriptions will automatically have access to SABC+ at no additional cost; they can also look forward to enhanced content offerings which they can subscribe to directly through SABC +.
For more information on Telkom’s products and services, please visit www.telkom.co.za, or follow Telkom on Twitter @TelkomZA and on our Facebook page.
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by Tech Talk | Nov 15, 2022 | Articles
Telkom has issued a trading statement for the six months ended 30 September 2022, warning shareholders to expect a decrease in earnings.
It says reported headline earnings per share (HEPS) and reported basic earnings per share (BEPS) are expected to decrease by between 45% and 55% compared to the prior interim period ended 30 September 2021.
This was mainly due to Telkom’s mobile postpaid vs prepaid mix changing which had the impact of deferring revenue over 24 to 36 months, as well as the cost base increasing. The resultant reduction in earnings is a combination of the following:
* The impact of revenue deferral resulting from the continued growth of our post-paid mobile sales reduced revenue recognised by R299-million;
* A shift in mobile product mix coupled with the upfront spend on handsets recorded immediately (while associated revenue is recognised over 24 to 36 months) increased the cost of handsets, equipment, software and directories by more than 30% from R2 453-million in the prior period;
* Maintenance costs and service costs also increased materially reflecting an increased mobile network for the period. Maintenance costs increased by more than 10% from R1 924-million, while service fees increased by more than 20% from R1 611-million, also impacted by higher backup energy costs due to accelerated loadshedding during the period;
* These costs were partially offset by savings in other areas as payments to other operators, employee costs, marketing, and other expenses were well managed;
* Net finance charges and fair value movements also partially offset the impact of increased costs and declined by more than 15% from R659-million due to a favourable foreign exchange hedging position during the period; and
* Reduced taxation for the period also contributed in offsetting the impact of higher costs.
Notwithstanding the weaker performance in earnings and challenging trading environment, Telkom expects to sustain its topline revenue compared to the prior period.
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by Tech Talk | Nov 7, 2022 | Articles
Telkom has threatened to cut off communications services to the South African Post Office (Sapo) over an outstanding debt of over R225 million.
Sapo CEO Nomkhita Mona warned Telkom’s enterprise service division BCX that such a development could jeopardise the payment of social grants to around 10 million South Africans.
Sources at the state-owned postal company reportedly told Sunday Times that it had to make an “emergency” payment this past week to avoid its Telkom-sourced services going offline.
Telkom has been providing the Post Office with communication services as part of a R960-million contract that started in August 2014 and is set to expire in December 2022.
While the Post Office’s executives want the contract to be extended, the Sapo board wants it to be terminated and an open and competitive tender bidding process to be launched for a new provider.
Sunday Times has seen correspondence between BCX, Sapo, and the office of communications minister Khumbodzu Ntshavheni, in which it lambasted Sapo’s failure to pay for products and services rendered to date.
“Sapo defaulted on the payment plan on many occasions despite your [Ntshaveni’s] intervention at some stage and several reminders and correspondence to comply with the payment plan,” said BCX CEO Jonas Bogoshi.
Bogoshi originally gave Sapo until 30 September 2022 to pay off the debt, but it appears that Telkom only threatened action this week.
In addition to the R225 million, Sapo has to pay R30 million every month to Telkom until the end of the contract.
Sapo has disputed the R225 million figure.
Mona said it had not been included in the payment agreements signed by the Post Office and questioned how Telkom quantified the amount.
She also said Sapo had obtained a legal opinion which suggested the contract and its accompanying agreements were illegal as the correct procurement processes were not followed when the contract was awarded.
Additionally, Mona said the suspension of services did not form part of the specific rights and remedies of an aggrieved party in the case of breach of contract.
Despite receiving billions in bailouts for several years, the Post Office is in deep financial distress.
In its latest annual results for the 2020/2021 financial year, it reported a loss of R2.3 billion — R469 million more than in the previous year.
The entity has been unable to pay rent, electricity, and water at several branches, leading to several landlords shuttering Post Office premises.
It has also failed to pay hundreds of millions in employees’ medical aid, pension, and income tax contributions.
Koos Benadie, director at Pretoria-based law firm Barnard Inc., has warnedthat this could lead to Sapo directors facing criminal charges.
According to the Financial Services Laws General Amendment Act 45 of 2013, which took effect in 2014, deducting employee contributions without paying them to the relevant service provider is a criminal offence.
Benadie argued that Sapo’s directors could be held liable in civil and criminal capacity for non-payment of the pension fund and medical aid contributions.
Mona recently revealed one of the major reasons for Sapo’s financial quagmire was that it carried half the cost of providing government’s social relief of distress (SRD) grants at its branches.
The grant was introduced to provide financial relief to South Africans hard hit by the Covid-19 pandemic, but has continued to be offered despite economic activity returning to normal.
“I don’t know how many South Africans know this, [but] the Post Office has been subsidising the government in the delivery of the [SRD] grants,” Mona said.
“Our cost of delivering that service over the counter is just over R30. What we were being paid by Sassa was R15. Nobody runs a business like that.”
The Post Office’s annual report for 2022 said it processed 15.2 million grants to beneficiaries during the 2021/22 financial year.
That means the Post Office paid around R228 million out of its own funds during the financial year to cover the costs.
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