Telkom, Vodacom show positive interim results

Von Nano Mothibi

Telkom SA Ltd. and the Vodacom Group (Pty) Ltd. Monday announced their interim results. Telkom reported revenue growth of 7 percent, and also growth of 19 percent in operating profits to R5.1 billion (US$8.3 million), compared to R4.3 billion for the same period last year, while Vodacom reported revenue growth of 20.3 percent to R13.6 billion.

Telkom said cash requirements for group capital expenditure of R2 billion, its repayment of R2.3 billion in net debt, and the R1.6 billion paid to repurchase Telkom shares, were facilitated by cash from operating activities of R5.5 billion.

?A consistent performance has facilitated the repayment of a large portion of the group?s debt, and enabled it to invest in its people and market place, while improving efficiencies and securing opportunities for future growth,? says Sizwe Nxasanam, who delivered Telkom?s results.

Telkom?s fixed-line revenue came to R15.4 billion, up from R15.1 billion this time last year. Mobile revenue was R6.0 billion, up by R4.9 billion from last year.

Nxasana also announced that Telkom plans to keep its prices competitive, and that it had filed its 2005 tariff adjustments with Icasa, proposing an overall tariff increase of 0.2 percent -- a 5.5 percent increase in the cost of local calls, a 6.3 percent increase in subscriptions, a 28 percent cut in the cost of international long distance calls, and a 10 percent cut for domestic long distance calls, while the data services prices will remain unchanged.

Having had grown its data revenue by 12.5 percent, the group is also aiming to accelerate broadband adoption. At present, it has 36,716 ADSL customers in SA, but Nxasana says Telkom is targeting 250,000 customers by 2007. ?And we believe that we are going to reach that target quite comfortably,? he adds. Vodacom?s data revenue increased by 14.5 percent to R586 million, due to SMS traffic growth.

Nxasana says that by next year Telkom expects to have soft-switching capability deployed in its national network to support VoIP solutions and to provide advanced call control, hosted IP telephony and IP PBX solutions. The group is also working with Intel to begin trials early next year for next-generation WiMAX broadband wireless networks to SA.

Vodacom, on the other hand, announced a 40 percent growth in its total customer base to 13.5 million, most of which came from the prepaid market, which, it says, increased by 34 percent to 9.7 million customers. The contract market grew by 32 percent to 1.6 million.

Alan Knott-Craig, Vodacom?s CEO, said the strong growth in customers resulted from 2.7 million new gross connections in SA. He emphasizes that ?focus on local customer upgrade and retention policies drove contract churn to its lowest level in the company?s history at 8.6 percent, compared to the previous 10.8 percent. Prepaid churn dropped from 44.1 percent to 21.9 percent, mainly due to changes in the disconnection policy governing prepaid customers, although this was expected to increase to about 35 percent by year-end.?

Knott-Craig, concluded by saying that Vodacom?s partnership with Vodafone, its 35 percent shareholder, would give it access to the world?s biggest mobile community, as well as research and development, and enable it to drive revenues from its 3G network.