Slide 1: Group Interim Results for the 6 months to 30 September 2013
Telkom SA SOC Limited Group Interim Results for the 6 months to 30 September 2013 18 November 2013
Slide 2: Sipho Maseko, Group Chief Executive Officer
Sipho Maseko Group Chief Executive Officer
Slide 3: Agenda
AGENDA 1. Overview 2. Business performance 3. Financial results 4. The Future 5. Q&A 3
Slide 4: Laying the foundation to stabilise for future growth
Laying the foundation to stabilise for future growth ● Healthy contract pipeline in Telkom Business ● Wholesale is preferred supplier for submarine connectivity ● Substantial increase in Business IT services revenues ● Winner of MyBroadband Fixed and Mobile broadband provider for 2013 ● Launched new
Slide 5: Results positively influenced by non-recurring items
Results positively influenced by non-recurring items Sep 2013# Sep 2012* % Net Revenue R 13,165m R 13,027m 1.1 Operating Expenses R 12,496m R 12,209m 2.4 EBITDA R 3,933m R 3,948m (0.4) Mobile EBITDA loss R 773m R 716m (8.0) Capital investment R 3,173m R 2,123m 49.5 Free Cash Flow R 33m R 1,510m (97.
Slide 6: Wholesale and Networks
Wholesale and Networks Key business drivers Focus areas Next Generation Network on track with Next Generation Network moves into more than 158 000 homes passed on the high gear MSAN Network Expand business development capability Launched all-IP core network to harness demand Maintain and regain scal
Slide 7: Telkom Business
Telkom Business Key business drivers Focus areas Improved Broadband revenues due to Managing migration: from voice services improved Internet offering and better DSL to data; from basic data to managed data customer mix network services; and from copper to fibre Lower voice revenues driven by Buildi
Slide 8: Telkom Consumer
Telkom Consumer Key business drivers Focus areas Mobile data revenue improved 50.0% Improving customer experience H1 2014 vs H1 2013 through operational improvements and product enhancements Fixed-line data revenue improves 3%; broadband subscriber growth of 6.7% Accelerating broadband take-up in ta
Slide 9: Deon Fredericks, Acting Chief Financial Officer
Deon Fredericks Acting Chief Financial Officer
Slide 10: Interim Results Six months ended 30 September 2013
Interim Results Six months ended 30 September 2013 Sept 2013 Sept 2012 % Operating Revenue R 16,192m R 16,146m 0.3 Net Revenue R 13,165m R 13,027m 1.1 Operating Expenses R 10,323m R 12,598m 18.1 EBITDA R 6,106m R 3,559m 71.6 Depreciation & Impairments R 3,091m R 2,966m (4.2) Capital Investment R 3,1
Slide 11: Building momentum for future growth
Building momentum for future growth Sept 2013 Sept 2012 % Operating Revenue R 16,192m R 16,146m 0.3 Net Revenue R 13,165m R 13,027m 1.1 Operating Expenses R 12,496m R 12,209m 2.4 EBITDA R 3,933m R 3,948m (0.4) Depreciation & Impairments R 3,091m R 2,966m (4.2) Capital Investment R 3,173m R 2,123m (4
Slide 12: Higher mobile and Business IT data revenues
Higher mobile and Business IT data revenues 25.8% 11.2% Voice and interconnection: R 8,924m – 55.1% (Sept 2012: 58.3%) Data: R 5,453m – 33.7% (Sept 2012: 32.8%) Subsidiaries, CPE sales and other: R 1,815m – 11.2% (Sept 2012: 8.9%) 3.4% 33.7% 55.1% Year on year revenue increase Year on year revenue d
Slide 13: Voice remains under pressure
Voice remains under pressure (5.2%) 9 414 8 924 (7.7%) 1.1% 4 411 4 071 3 889 3 847 (15.4%) 874 739 Total voice and Voice utilisation Voice subscriptions Interconnection interconnection Sept 2012 Sept 2013 13
Slide 14: Data revenue gaining traction
Data revenue gaining traction ADSL 6.7% Subscribers 898 203 841 831 795 419 Sept 2011 Sept 2012 Sept 2013 Managed data Traffic Volumes network sites in TBytes 19 655 64.4% 45 441 12.8% 40 284 37 181 11 958 8 205 4 764 Sept 2011 Sept 2012 Sept 2013 Sept 2010 Sept 2011 Sept 2012 Sept 2013 ADSL Total 1
Slide 15: Real cost reduction remains crucial
Real cost reduction remains crucial (1.8%) 9 405 9 243 (3.6%) 4 987 4 812 6.4% (5.8%) 2 517 2 357 1 557 (14.0%) 1 472 504 442 Operating Employee SG&A Service fees Operating leases expenses (excl expenses depreciation) Sept 2012 Sept 2013 Excluding the curtailment gain and the Competition Commission
Slide 16: Capital programme gaining momentum
Capital programme gaining momentum Sept 2013 Sept 2012 % Total capital expenditure R 3,173m R 2,123m 49.5 Group capital expenditure R 2,358m R 1,602m 47.2 excluding mobile Converting access network R 978m R 276m 254.3 to IP (NGN) Maintaining/enhancing existing R 1,380m R1,326m 4.1 telecoms & IT netw
Slide 17: Maintaining strong liquidity
Maintaining strong liquidity Sept 2013 Sept 2012 % Cash flow from operating activities R 3,131m R 3,490m (10.3) Capital Investments (R 3,133m) (R 2,085) (50.3) (Reduction)/increase in term debt (R 2,259m) R 265m (952.5) Cash at end of period R 1,190m R 561m 112.1 Discretionary investments R 3,750m R
Slide 18: Sipho Maseko, Group Chief Executive Officer
Sipho Maseko Group Chief Executive Officer
Slide 19: Addressing key issues affecting performance
Addressing key issues affecting performance › Impairment of legacy assets › Post-retirement medical aid liability › Dealt with competition commission issues › Engaging with regulatory structure › Concluded agreement with Organised Labour › Initiated efficiency measures › Renewing the team 19
Slide 20: Redefining our future
Redefining our future The status quo STRATEGIC AMBITION Poor brand perception and customer service Deliver superior customer experience Underinvestment in fixed Focus investment in the access network and right technologies and de-risk mobile start-up mobile network Implement sustainable cost High co
Slide 21: Strategic framework to focus our actions
Strategic framework to focus our actions • Discipline in allocating capital • Delivering superior customer service and experience • Driving execution capability and connectivity • Investing in the right technologies to build an invincible network • Obtaining the support of all our stakeholder to del
Slide 22: Managing costs to achieve a sustainable future
Managing costs to achieve a sustainable future • Reduce external spend • Optimise internal costs and improve productivity • Streamline network maintenance expenses • Integrate Consumer and Mobile platforms to realise cost synergies • Focused product offering • Reduce development burden 22
Slide 23: Our financial targets over the next three years
Our financial targets over the next three years F2014 F2015 F2016 Stabilise Revenue Stabilise Grow to grow Increase Increase Increase EBITDA margin 1%- 2% 1%- 2% 1%- 2% Capex to Revenue 18% - 21% 14% - 17% 14% - 17% Net Debt to EBITDA ≤1 ≤1 ≤1 Reinstate Dividend Reinstated Reinstated 23
Slide 24: Summary
Summary Deliver superior customer experience Resolve Mobile – remove uncertainty and curtail future opex and capex Disciplined capital allocation with greater emphasis on productivity and returns Improve efficiency - cost base, execution Find revenue growth – to secure future 24
Slide 25: Thank you
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Slide 26: Appendix
Appendix
Slide 27: Organisational Structure
Organisational Structure Telkom Board Group Chief Executive Officer Head of Strategy & Chief Financial Regulatory Officer (In GCEO Office) Chief of Procurement Chief Risk Officer Chief of Human GroupExecutive: Group Executive: Resources CompanySecretariat Company Secretariat Chief Information Chief