Telkom CEO Serame Taukobong said yesterday that the mobile operator did not need a rescuer to save it as the business had the right levels of liquidity and that the journey Telkom had been undertaking would deliver the true results.
“We do not need a knight in shining armour, be it my former employee or my former employer,” Taukobong said at the company’s results presentation.
He was reacting to an unsolicited proposed takeover bid by a consortium of companies led by Telkom’s former CEO, Sipho Maseko. Telkom has since requested further clarity on several matters, including the proposed offer price and certainty of funding, from the consortium
When asked about Telkom’s seeming reluctance to accept offers, Taukobong said: “Let me be cultural and philosophic. It’s like a process of lobola. When you go to a lobola, you send people upfront with a letter to show intent.
“You also leave something with the family to show that you can take care of their daughter. So until somebody comes to our chair with a strong letter and also proof that they can deliver on their proposition, then all approaches will not be considered.”
Taukobong said the company was still assessing the offer and could not yet talk about pricing or due diligence.
In its results posted yesterday, the mobile operator reported a decrease in profits for its annual results for the year ended March 31, 2023.
It said that the year was characterised by unprecedented levels of load shedding, constrained consumer spending, and dynamic competition against the backdrop of a sluggish economy with persistent inflationary pressures.
The group flagged that headline earnings per share (Heps) dropped by 76.6% to 134.6 cents, compared to 575.3c per share for the prior year.
“As we continued to manage the transition to next-generation technologies, group performance was under pressure from a pronounced reduction in legacy revenues for the year,” it said.
Despite this, Telkom said revenue grew marginally by 0.9% to R43 billion. However, the incremental costs of load shedding reduced overall profitability, notwithstanding its efforts to manage operating costs.
The group said it would not declare a dividend for at least another year, given its cash position and the state of the economy.
The group also reported an R9.97bn loss due to impairments, restructuring costs and load shedding.
The group said active mobile subscribers grew 7.8% to about 18.3 million.
Telkom said Openserve reported a 26% decrease in fixed-line revenue and a more than 30% drop in legacy data revenue. BCX had a challenging year but managed to maintain stable revenue levels at R14.3bn.
Telkom said Swiftnet had non-binding bids for its mast and towers business, but none had met its criteria to be considered an asset held for sale in 2023.
Looking ahead, the group said the 2023 financial year was challenging, with unexpected additional cost pressures caused by load shedding amid an already strained economy.
“The impact of continued migration to newer technologies was felt across most of our businesses, and with increasing competition resulting in downward pricing pressure in the market, we launched our cost transition programme to mitigate this impact and rebase our operating costs to improve profitability in the medium term.
“In the last quarter of the year, we launched a labour consultation process aimed at restructuring the organisation to meet future demands. The Openserve and BCX businesses were the most impacted in the group.
“This process is largely complete and has realised its intended goal. The benefits of this restructuring will materialise partially in FY2024, with the full impact expected from FY2025 onwards,” it said.
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