By Nqobile Dludla
JOHANNESBURG (Reuters) -South Africa’s Telkom lowered its revenue and profit guidance for the medium term due to a slowdown in growth in its mobile business and a decline in its legacy fixed-line unit, it said on Tuesday, sending its shares down more than 7%.
Group earnings before interest, tax, depreciation and amortisation (EBITDA) slipped 0.5% to 11.9 billion rand ($740.6 million) in the year ended March 31, while group revenue fell 1.1% to 42.8 billion rand.
The majority state-owned operator now expects group revenue to grow at a mid-single digit percentage over the next three years from mid- to high-single digit growth. EBITDA growth is also expected at mid-single digit from mid- to high-single digits.
“Telkom mobile has grown ahead of the market and secured a third market position. Going forward, we expect Telkom mobile to grow in line with its industry peers,” the operator said.
Mobile service revenue increased by 3.3% to 17.505 billion rand in the year ended March 31, a significant slowdown from the previous year’s 34.5% growth when data demand surged due to people working and schooling from home.
Meanwhile, mobile data revenue grew by 2.9%, also a slowdown.
Telkom Group CEO Serame Taukobong said this was due to consumers being under financial pressure as the cost of living has increased and some sectors of the economy recovering slowly.
Its fixed-line business continued to struggle, as users migrate from traditional fixed voice to newer technologies.
Telkom said headline earnings per share (HEPS) rose by 2.5% to 575.3 cents, boosted by lower finance charges and fair value movements.
For its technology division, it will announce which local and international partners it chose in a month or two, Taukobong told Reuters.
He added that the partners include tech companies in the data centre space and potential suitors from India who would bring a combination of scale, capabilities and equity.
($1 = 16.0674 rand)
(Reporting by Nqobile Dludla; editing by Jason Neely and Emelia Sithole-Matarise)
