Telkom CFO particularly proud of 5 percent topline growth in a difficult climate
Tsholofelo Molefe says the great results come from a relatively new team gelling well together.
On Tuesday, Telkom released its financial results for the year ended 31 March 2019. Significant features of the presentation included an increase in operating revenue or 5.3 percent to R41.8 billion and in EBITDA or 8.5 percent to R11.3 billion.
Most of its growth is owed to the performance of Telkom's mobile services revenue, which increased by 58.3%.
"Essentially, what's important is that it's a really tough trading environment with a low GDP growth, and 50 percent of our business is GDP sensitive in the BCX environment, which services enterprises and the public sector," says Telkom CFO Tsholofelo Molefe .
She is particularly proud of the 5 percent growth on top line. “It's been really phenomenal for us. Most companies come out flat at top line. "
She said that the focus on the growth of the mobile business is definitely yielded fruits. “Six years ago, it was only 3 percent of our revenue overall, so we've accelerated that and derisked the risk we saw in mobile. We've been very thoughtful about how we allocate the capital requirements of the business. We've had a clear strategic perspective on what we prioritize and how we gain skills to compete in the industry in a meaningful way, being the fourth mobile operator. ”
She acknowledges that voice is dying a slow death, so a focus on the data network was necessary, to cater for customers looking for speed and flexibility. "We created products for the consumer market and were able to bundle them in such a way that they were attractive to the end consumer."
These cost-competitive prices start at R99 for a 1GB bundled service, which is the cheapest on the market, and offers free WhatsApp calling and free Telkcom to Telkom calls. "It's been really attractive to our customers and that's why we've seen such a huge uptake, and what's made us so successful."
Enterprise and public sector
For the enterprise and public sector market, Telkom's go-to-market strategy has involved creating a bundle of services for that market. “It's not only IT services like software or managed services. They come bundled with telecommunications services - connectivity. Customers - the CIOs and CFOs or those companies - because one throat to choke, so we've been able to win big deals from the likes of Didata and EOH by bundling services and replacing them at a more reasonable price. ”
However, she says that there is still a lot of work to do in this area, as BCX has gone through a big reorganization, as so, "as with any reorganization, there has been some instability." The new leadership has shown fresh thinking, and are doing really well at restabilizing the business, but they also have a lot of work to do in terms of resetting their cost base to be a lot more competitive as well. ”
There are also a number of new projects that Tsholofelo believes will start to bear significant fruit. One is called Small Medium Enterprise, which exists in various parts of the business, but is now set up as a division focusing specifically on this customer segment. "So they'll get the attention that they deserve from a customer requirements perspective."
The other new project is the property business, Gyro, which was established just about two years ago. “It looks after our masts and towers portfolio. They've done a lot of work in terms of accelerating and maximizing tenancy and occupancy rates on our masts and towers. And we have a portfolio or country that we are looking for, to generate revenue into the future. ”
Leadership and strategy
She says that a lot of gains that Telecom have achieved in the last year have been on the back of cost savings and efficiencies. “This journey started with our chief executive Sipho Maseko six years ago. With all the plans in place, we've done very well this year. The focus on cost has been relentless. We've done very well to contain costs, reducing them by one and a half percent this year. We will continue with that. And the areas that are growing, over time, we expect them to gain economies or scale and gain some margins of improvement. ”
She says that Telkom believes in maintaining a very strong balance sheet to make sure that as the business grows, it has adequate headroom to meet all its capital requirements.
“We are very happy with the results we've seen, particularly in a really tough economic environment - not just for us but for the industry as a whole. Most of the people on Sipho's exco are new. I've only been CFO of the company for nine months, the CEO of BCX has been there for less than a year, as well as the CEO of our consumer mobile business. And the CEO of Gyro has just been here for a year now. It's a fairly young team, but we are very proud of how it gels together. As a business we are very clear about the strategic direction of the company. ”
In conclusion, she says:
"It's been a great year, but there are still tough times ahead, so we need to continue with the hard work."