Telkom’s permanent staff had shrunk by 15% by the end of its financial year to March 31, its six prescribed officers were paid 51% more, and the group’s financial performance was still far from where it should be.
This was according to the group’s annual report released on Friday, in which chairman Mvuleni Qhena said their operational and financial performance had significantly improved over the year, but were “far from where it should be.”
Revenue increased 1.6% to R43.23 billion, despite tough trading conditions, while earnings before interest tax depreciation and amortisation (EBITDA), the group’s key measure of profitability, increased 5.2% to R10.04bn. Free cash flow was up 115.6% to R424 million, due to better working capital management and a 337.2% rise in pre-tax profit.
Employee costs fell 4% to R7.89bn due to a 15% reduction in headcount to 9 877 employees, from 11 624 in 2023, 0% salary increases for management and the 5% average salary increase for bargaining unit employees, only effected in the third quarter.
The workforce fell due to the “workforce optimisation process” in the 2023 financial year, and some R1bn of fixed cost savings arose from this, the annual report showed.
The remuneration report showed the six prescribed officer’s total remuneration paid increased 51% to R47.79m from R31.58m.
CEO Serame Taukobong’s remuneration increased 9.8% to R12.43m, with the guaranteed pay unchanged in 2024, and inclusion of a short term incentive amount versus no short term incentive paid out in 2023.
Taukobong said they were delivering on strategy by exploring all options to unlock value. This strategy was premised on the board’s view that Telkom’s market capitalisation did not represent the intrinsic value of its underlying assets.
In March 2024, Swiftnet, the masts and towers business, was sold for R6.75bn to an Actis LLP infrastructure fund with Royal Bafokeng Holdings as its B-BBEE partner.
“By disposing of this non-core asset, we deliver on the Value Unlock Strategy while retaining access to the use of masts and towers infrastructure for our mobile and fibre businesses. The divestiture aligns with our strategy to concentrate on our infrastructure assets, while realising the inherent value in non-core holdings. It is one step closer to positioning Telkom as a leading infrastructure group at the heart of South Africa’s digital future,” said Taukobong.
The board also revised the dividend policy. A new policy would be based on free cash flow while prioritising a strong balance sheet and future capex. A dividend payout range of 30% to 40% of free cash flow was proposed, paid annually.
“The disposal of Swiftnet will allow us to enter the next phase of monetising Telkom’s existing and future digital infrastructure as an InfraCo. This will entail efficiently investing in our mobile and fibre network businesses, while expanding our ICT capabilities anchored by data centres to grow our IT managed services.”
Growth would be facilitated by efficient capex deployment in the Mobile business, including exploring enhanced roaming propositions with other operations, to capture high-traffic activity while keeping investment at manageable levels.
The fibre business, Openserve, would monetise its footprint as it continued to roll out fibre and connects homes and enterprises.
The immediate to long-term rollout of 5G, and equipment upgrades due to the migration of customers from 2G and 3G to newer-generation mobile connectivity in 4G and 5G by the end of 2027, would drive fibre connectivity rollouts to towers and 5G small cell sites, Telkom said.
BUSINESS REPORT