Mobile saves Telkom as landlines ring off. The telecoms operator grew mobile customers by 50% in the six months to end-

September but BCX weighed on earnings.

Telkom is ringing up sales to mobile customers as revenue from landline

customers starts to dwindle. The telecoms operator grew its mobile customer

base by 50% to 6.5 million in the six months to end-September, using broadband

and cheap data-led products to attract new users.

However, although new revenue streams are compensating for the decline in

traditional products they are not as profitable. It's trying to stimulate more

data traffic to preserve its margins.

As well as its growing mobile business, Telkom says its Openserve and Gyro

businesses also contributed positively to first-half results. Openserve, a

wholesale infrastructure connectivity provider, marginally increased its

revenue, despite the decline in traditional revenue. Gyro, which manages masts

and towers, property development and property management services, continued

to grow external revenue and the mast and tower portfolio tenancy ratio.

On the downside, enterprise business BCX was negatively affected by the weak

economy as well as the decline in voice revenue. The group said large

corporates reduced or deferred spending, while public sector ICT spend

remained subdued.

Operating revenue rose 5.2% to 10.8 rand billion as a 54% rise in Mobile service

revenue to 3.58 rand billion compensated for a 7% decline in Fixed service revenue

to 10.8 rand billion. Information technology revenue improved by 3.3% to 3.77 rand

billion. Earnings before interest, tax, depreciation and amortisation (EBITDA)

increased by 2.9% to 5.32 rand billion but headline earnings per share (HEPS) fell

3.3% to 288c. Adjusted HEPS, which exclude the impact of voluntary early

retirement and severance packages of 282 rand million and the related tax impact

of 80 rand million, rose 10.3% to 328.6c. It's reduced its interim dividend y 5.1%

to 112.14c per share.

Telkom said high-demand spectrum was likely to be licensed within the next 12

to 18 months. However, it said the 700 MHz and 800 MHz bands would only be

commercially available after completion of digital migration and restacking.

It also expects the Electronic Communication Amendment Bill to be passed

within the next few months.

We believe that our operating environment will continue to be challenging with

macroeconomic conditions not being favourable to growth, and the private and

public sectors respectively deferring spend on ICT," Telkom said. "Our

strategy, therefore, will be more focused on pockets of growth, while we

continue extracting efficiencies from past investments and driving a

sustainable cost management approach."

Its shares closed 5.1% lower at 52.34 rand yesterday.

Telkom results are out today with the company posting revenue growth and a

slight decline in the adjusted HEPS.

I'm interested on their view that the Spectrum Auction will drive data

prices up in order to recoup the cash spend. @TelkomZA

-- Siba (@s_nombebe) November 13, 2018

Another telecoms company, Telkom has increased its customer base. Despite

tough economic times, Telkom's customers increased by 50% they now have 6.5

million mobile customers. #eNCA #TelkomResults

-- Heidi Giokos (@Heidigiokos) November 13, 2018