Telkom Exceeds 21M Subscribers in Q1 2024

Telkom, a prominent South African telecom company, has announced impressive results in its trading update for the quarter ending June 30, 2024. 

The company reported a remarkable 3.9% increase in revenue, reaching R10.9 billion (approximately $587.2 million), alongside a significant rise in its mobile subscriber base, which has now surpassed 21 million, marking a 14.6% growth.

Strong Revenue Growth Driven by Next-Generation Services

The surge in Telkom’s revenue can be attributed to the rising demand for its next-generation network (NGN) offerings. 

The company experienced a 9.5% increase in mobile service revenue, a 7.1% rise in fixed data NGN revenue, and a 10.3% boost in information technology revenue. 

Serame Taukobong, the Group Chief Executive Officer, expressed satisfaction with the company’s performance, stating, “Telkom had a good start to the financial year with a pleasing performance on the top line benefiting from our data-led strategy and compelling value propositions. Our next generation revenue streams continued their positive momentum and grew by R576 million, an increase of 7.0%. NGN revenues now comprise 80.7% of Group revenue.”

This growth underscores Telkom’s commitment to delivering innovative and value-driven offerings that significantly enhance data consumption among its users.

Mobile Subscriber Growth Fuels Performance

Telkom’s mobile subscriber base has reached an impressive 21.2 million, a crucial factor in the company’s strong quarterly performance. 

The surge in subscribers is largely attributed to Telkom’s data-centric approach, which includes an expanded mobile business and enhanced fibre offerings. 

The mobile segment alone saw external service revenue climb by 9.5%, totaling R4.9 billion (about $268.99 million). 

Overall external revenue for the South African telecom company grew by 5.3% to R5.9 billion (around $308.9 million).

The demand for data services has remained robust, with mobile traffic increasing by 25.8% year-on-year and fixed traffic rising by 33.0%. 

Telkom also reported significant growth in its ‘beyond connectivity’ services, with revenue hitting R407.5 million, driven by a 32.3% year-on-year increase in its airtime advance product, which now constitutes 32.9% of total recharges.

Challenges in Legacy Revenue Streams

Despite the positive growth in NGN services, Telkom faced challenges in its legacy revenue streams, which saw a decline of 2.4% year-on-year to R3.056 billion. 

This decline was primarily due to a significant drop of 28.4% (R188 million) in voice and legacy revenue. 

The company’s strategic focus on next-generation services is aimed at mitigating these declines and positioning Telkom for future growth.

Read Next: Telkom Plans to Start Paying Dividends Again

Strategic Moves to Enhance Financial Position

In March 2024, Telkom made a strategic move by selling its Swiftnet masts and towers business for R6.75 billion (approximately $355.4 million). 

This decision reflects Telkom’s commitment to strengthening its financial position, reducing debt, and improving liquidity. 

On August 1, 2024, the Competition Commission approved the acquisition of Swiftnet by TowerCo, concluding that the transaction would not hinder competition in the market.

Looking Ahead

As Telkom continues to expand its subscriber base and enhance its service offerings, the company remains focused on leveraging its data-led strategy to drive future growth. 

With a strong emphasis on innovation and customer value, Telkom is well-positioned to navigate the evolving telecommunications landscape in South Africa.

Telkom’s impressive performance in Q1 2024, marked by significant subscriber growth and robust revenue increases, highlights the company’s successful transition towards next-generation services. 

As it addresses challenges in legacy revenue streams and continues to innovate, Telkom is poised for a promising future in the competitive telecom sector.

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