Telkom Sa Soc Ltd. · JSE:TKG
Telkom Sa Soc — H1 FY2025 Earnings Presentation
51 slides from Telkom Sa Soc's earnings presentation, November 2024
Slide 1: Interim Results Presentation
Seamlessly Telkom SA SOC Ltd connecting our customers to a better life Interim Results Presentation For the six months ended 30 September 2024 Interim Results Presentation 2024
Slide 2: Disclaimer
Disclaimer Many statements in this document and verbal statements that may be made Telkom cautions readers not to place undue reliance on forward-looking by Telkom or officers, Directors or employees acting on Telkom’s behalf statements. All written and verbal forward-looking statements attributable
Slide 3: Content
1 2 3 4 Business Outlook H1 FY25 Units Financial and Content Highlights Reviews Review priorities Confidential Interim Results Presentation 2024
Slide 4: H1 FY25 Highlights
Serame Taukobong Group Chief Executive Officer H1 FY25 1 Highlights Confidential Interim Results Presentation 2024
Slide 5: Strategy drives performance
Strategy drives performance Solid data revenue growth driven by compelling data propositions Cost optimisation programmes yielding results Significant improvement in net debt to adjusted EBITDA Sustained positive free cash flow Telkom Retirement Fund successfully converted to defined contribution fu
Slide 6: Solid group financial performance driven by data-led strategy
Solid group financial performance driven by data-led strategy Summary of adjusted financial results for continuing operations Revenue Group Mobile Fibre growth revenue +1.9% data revenue +12.7% data revenue +15.5% Earnings Adjusted +18.3% Adjusted +3.6ppts Adjusted +68.0% EBITDA R5 606m EBITDA margi
Slide 7: Strong operational performance driven by data-led strategy
Strong operational performance driven by data-led strategy Mobile broadband subscribers Mobile broadband traffic Mobile sites integrated ‘000 19.6% Petabytes 25.7% 1.7% 14 582 7 814 12 195 11 035 850 7 684 676 550 7 384 H1 FY23 H1 FY24 H1 FY25 H1 FY23 H1 FY24 H1 FY25 H1 FY23 H1 FY24 H1 FY25 Fibre ho
Slide 8: Execution on disposals of non-core assets
Execution on disposals of non-core assets Disposal of non-core assets • R204 million realised from property sales • 39 properties with estimated R731 million sales value in conveyancing process Swiftnet disposal progressing well • Competition Tribunal approval received in September, following Compet
Slide 9: Group ESG Highlights: Building resilience through sustainability
Group ESG Highlights: Building resilience through sustainability 1.58 GWh 450 820 34% SMMEs with female renewable energy presence on our representation at generated at Belville YEP digital and Telkom Park, management/ marketplace aimed contributing to leadership roles in at growing and energy transi
Slide 10: Business Units Reviews
Business 2 Units Reviews Confidential Interim Results Presentation 2024
Slide 11: Seamlessly connecting our customers to a better life
Seamlessly connecting our customers to a better life Confidential Interim Results Presentation 2024
Slide 12: A milestone for Telkom Mobile – Possible Begins Here
A milestone for Telkom Mobile – Possible Begins Here Best Mobile Provider in South Africa Positive customer • 2024/25 Ask Afrika Orange Index – benchmark of customer experience on our service excellence network High pre-paid growth and steady ARPU • +29.1% pre-paid subscriber growth Compelling • CVM
Slide 13: Mobile service revenue growth ahead of market
Mobile service revenue growth ahead of market Mobile subscribers Mobile service revenue Mobile data revenue Mobile EBITDA/EBITDA margin ‘000 24.6% Rm 10.0% Rm 12.7% Rm 30.4% 22 785 10 220 9 293 3 007 18 286 8 783 18 024 7 846 27.3% 6 964 2 374 48576 6 317 2 329 2 466 22.5% 2 966 2 800 48576 2 862 22
Slide 14: Seamlessly connecting our customers to a better life
Seamlessly connecting our customers to a better life Confidential Interim Results Presentation 2024
Slide 15: Continued growth in NGN revenue and improved EBITDA margin
Continued growth in NGN revenue and improved EBITDA margin driven by network modernisation Revenue NGN Revenue1 Operating Revenue EBITDA/EBITDA margin Rm 1.6% Rm contribution Rm 5.6% 4.7% 2 500 30. 0% 33.8% 31.8% 2 300 29.3% 19% 20. 0% 26% 2 100 33% 10. 0% 1 900 1 700 0. 0% 6 434 6 261 4 798 6 161 1
Slide 16: Transforming service delivery through our customer-centric approach
Transforming service delivery through our customer-centric approach and high availability of network Net Promoter Score (NPS) Fibre Broadband Average Assurance Visits – improved Time to Install – improved by 25.7% 4.4% by 15.0% Days 94 956 75.3 72.1 68.4 56 146 2.53 41 693 2.16 2.15 H1 FY23 H1 FY24
Slide 17: Seamlessly connecting our customers to a better life
Seamlessly connecting our customers to a better life Confidential Interim Results Presentation 2024
Slide 18: BCX programme focuses on reducing operational costs and improving revenue mix
BCX programme focuses on reducing operational costs and improving revenue mix Revenue IT Business revenue Adjusted EBITDA & Programme focus Rm Rm adjusted EBITDA margin • Grow IT services revenue and Rm improve margin • Cost containment & rightsizing – 4.2% 4.1% 24.6% ~400 people exited • Portfolio
Slide 19: Seamlessly connecting our customers to a better life
Seamlessly connecting our customers to a better life Confidential
Slide 20: Disposal of decommissioned properties accelerated
Disposal of decommissioned properties accelerated Completed property sales Rm Accelerated disposal of non-core properties Cash proceeds No. of properties 204 • R204 million cash proceeds from sale of 30 properties • Two public auctions yielded further 26 property sales • 39 properties in conveyancin
Slide 21: Seamlessly connecting our customers to a better life
Seamlessly connecting our customers to a better life Confidential Interim Results Presentation 2024
Slide 22: Swiftnet stable revenue growth and productive portfolio
Swiftnet stable revenue growth and productive portfolio Revenue EBITDA & EBITDA margin Productive portfolio growth Rm 9.4% Rm 8.0% (# of sites) 74.8% 73.9% 69.5% 4 063 5 5 0 8 0 . % +74 4 008 - 19 7 0 . % 5 0 6 0 . % 4 5 0 713 5 0 . % 660 652 4 0 527 4 0 . % 488 3 5 0 459 3 0 . % 3 0 2 0 . % 2 5 0 1
Slide 23: Financial Review
Nonkululeko Dlamini Group Chief Financial Officer Financial 3 Review Confidential Interim Results Presentation 2024
Slide 24: Robust and steady operational performance produced a good set of interim results
Robust and steady operational performance produced a good set of interim results Service Cost Positive Net debt to revenue optimisation FCF adjusted growth programme Improved operational EBITDA Solid revenue growth from Yielding results performance and a measured mobile, fibre related data & Signifi
Slide 25: Telkom Retirement Fund successfully converted to defined contribution
Telkom Retirement Fund (TRF) successfully converted from defined benefit to defined contribution Balance sheet derisked in line with best practice Regulatory approval for the rule change received in the first half of FY25 Financial position Statement of profit or loss Statement of cash flows • Derec
Slide 26: Adjusted EBITDA reconciliation: 18% increase in adjusted EBITDA
Continued progress on strategy execution has delivered an 18% increase in adjusted EBITDA Adjusted EBITDA reconciliation Continuing operations H1 FY24 H1 FY25 Rm 18.3% Adjusted H1 FY25 1.9% R91m 3.6 ppts 618 869 160 5 606 4 828 4 737 26.2% 22.6% 22.6% H1 FY24 Underlying H1 FY25 Restructuring TRF H1
Slide 27: Improved underlying Group financial performance driven by operations
Improved underlying Group financial performance driven by operations Continuing operations Group Adjusted Adjusted Adjusted Adjusted Free Net debt revenue1 EBITDA2 EBITDA BEPS2 HEPS2 cash flow3 to EBITDA2 margin2 up by up by up up up up by reduce 1.9% 18.3% 3.6 ppts 78.9% 68.0% 34.0% 0.5x to to to to
Slide 28: Data-led strategy remains key and we will continue to invest
Data-led strategy remains key and we will continue to invest in these revenue growth area Continuing operations Revenue by stream Rbn H1 FY25 Mobile, fibre related data & 10.1% information H1 FY24 R1 454m 15.8% technology services H1 FY25 R1 047m contribution to 15% Group 5% 10.0% 6% 48% 74% 9% H1 F
Slide 29: Focused cost optimisation programmes are yielding results
Focused cost optimisation programmes are yielding results Total expenses Continuing operations Rm Cost optimisation 2.6% Operating expenses Initiatives 9.4% 27.4% 1.7% • Migration of traffic onto own network 7.7% 2.2% 9.7% • Managing direct and operational costs • Network simplification 256 242 182
Slide 30: Improvement in adjusted EBITDA driven by financial discipline
Improvement in adjusted EBITDA driven by financial discipline and strategy execution Adjusted EBITDA improvement Continuing operations Comments Rm 18.3% 1.9% 39.9% 2.6% R869m • Revenue growth driven by service revenue growth of 10.1%. • Other income is positively 280 impacted by the gains from 561 p
Slide 31: Adjusted Profit after tax improvement of 80.3%
Adjusted Profit after tax improvement of 80.3% Continuing operations Comments Reported Restated Variance Adjusted Variance Rm H1 FY25 H1 FY24 % H1 FY25 % • Depreciation, amortisation, 1 Revenue 21 382 20 975 1.9 impairments and write-offs EBITDA 4 828 4 737 1.9 5 606 18.3 increased 5.7%, mainly due
Slide 32: Earnings growth on total operations
Earnings growth on total operations Continuing and discontinued earnings Once-off Continuing operations Reported Reported adjustments Adjusted Cents per share Cents per share H1 FY25 H1 FY24 H1 FY25 H1 FY25 BEPS 217.6 200.2 115.7 333.3 Continuing 173.2 161.5 115.7 288.9 78.9% Discontinued 44.4 38.7
Slide 33: Focus on working capital management efficiencies
Focus on working capital management efficiencies Movements in cash generated from operations Rm Comments R1 386m • Inventory management improved with the move from an own-inventory to a supply and install approach. 1 051 741 421 224 • Benefitting from the 153 332 138 focus on cash collections 6 227
Slide 34: Capital expenditures allocated to growth areas and driving efficiencies
Capital expenditures allocated to growth areas and driving efficiencies Capex spend and intensity Capex investments allocation Rm H1 FY25 Network population coverage 2% 7% 3 143 11.4% 18.1% 5% 2 737 38% 640 730 542 598 443 469 1 290 462 1 158 761 48% 960 801 3 097 2 543 Total H1 FY24 H1 Fibre FY23Ht
Slide 35: Sustainable but flexible approach in reducing debt and gearing
Adopted a sustainable but flexible approach in reducing debt and gearing, while improving our liquidity Continuing operations Debt maturity profile Net debt and liquidity headroom Call borrowings Rm Bonds Rm 10.1% 12.4% 9 319 4 000 Revolving credit facility 3 500 Term loans 5 559 3 000 3 760 3 760 2
Slide 36: Medium term guidance maintained
Medium term guidance maintained Medium term guidance H1 FY25 Inputs Drivers Outputs FY23 – FY25 (CAGR) Reported* New revenue streams Low to mid-single digit 2.1% (Fibre, Mobile & IT businesses) Revenue growth Sustainable cost Low to mid-single digit 2.1% Annual management program EBITDA growth* Sust
Slide 37: Outlook & Priorities
Serame Taukobong Group Chief Executive Officer Outlook & 4 Priorities Confidential Interim Results Presentation 2024
Slide 38: Data-led strategy remains our focus
Data-led strategy remains our focus Disciplined execution of data-led strategy as OneTelkom Executing paves the way for improved shareholder returns Smart investments to capture opportunities from healthy Smart investing appetite for seamless connectivity in South Africa Focus areas Leveraging Activ
Slide 39: Thank you Q&A
Thank you Q&A Confidential Interim Results Presentation 2024
Slide 40: Annexures
Annexures 5 Interim Results Presentation 2024 40
Slide 41: Seamlessly connecting our customers to a better life
Seamlessly connecting our customers to a better life Interim Results Presentation 2024
Slide 42: Mobile network designed to enable data-led strategy
Mobile network designed to enable data-led strategy Broadband subscribers Broadband traffic 4.5G integrated sites ‘000 Petabytes Improved network coverage 19.6% 25.7% 6.8% & capacity • Extensive deployment of Sub1Ghz • 82% - 4G population coverage • 89% - customers are 4G and 5G 14 582 7 264 12 195
Slide 43: NGN technologies driving growth
NGN technologies driving growth Consumer Operating Revenue Fixed-line NGN vs legacy split Consumer EBITDA/EBITDA margin Rm Rm Revenue growing 3.2% 29.2% as anticipated: 13 396 12 984 1 891 201 12 805 • Consumer 3.2% • Mobile service revenue 10.0% 19.4% 1 434 219 1 662 237 • Mobile data revenue 12.7%
Slide 44: Growing customer base with stable prepaid ARPU
Growing customer base with stable prepaid ARPU Subscriber growth ARPU ‘000 22 785 24.6% R Strong subscriber growth, 5.5% supported by steady ARPUs 206 Mobile subscriber growth: 3 007 18 286 18 024 186 182 • Overall = 22.8m (24.6% increase) • Post-paid = 3.0m 2 966 2 862 • Pre-paid = 19.8m (29.1%) 88
Slide 45: High 4G device penetration and growing 5G base
High 4G device penetration and growing 5G base • 93% of customers are 4G and 5G • 66% of voice customers on Voice over LTE (VoLTE) • No legacy 2G network, all 2G terminals use roaming • 6% active 5G sites • 83% 4G population coverage • 9% 5G population coverage 1% 6% 84% 9% • 85% 3G population cover
Slide 46: Seamlessly connecting our customers to a better life
Seamlessly connecting our customers to a better life Confidential Interim Results Presentation 2024
Slide 47: Evolution of new generation revenue
Evolution of new generation revenue Broadband Revenue1 Enterprise Revenue Carrier Revenue 9.0% 4.8% -2.2% Rm Rm Rm Key highlights NGN NGN NGN • Total broadband revenue 14.2% 13.0% -2.0% increased by 9% driven by continued growth in NGN broadband which grew by 5% 1 890 9% 845 1 734 818 807 14.2%. 1 5
Slide 48: Connect-led strategy continues to drive the highest connectivity rate
Connect-led strategy continues to drive the highest connectivity rate – 49.7% Fibre homes passed Fibre homes connected Enterprise1 Carrier1 11.4% Connectivity Rate 18.1% Business Circuits 3.8% Circuits -0.2% 49.7% 46.2% 46.8% 700 000 40. 0% 600 000 500 000 20. 0% 1 290 462 400 000 640 730 1 158 761
Slide 49: Fixed broadband evolution
Fixed broadband evolution Fixed line broadband data Fixed line broadband Fixed line broadband consumption services services Key highlights Petabytes 28.5% Services (‘000) Services (‘000) 14.5% • Continued increase in data consumption, with a remarkable 28.5% increase from the prior year 7% 755 15% 6
Slide 50: Seamlessly connecting our customers to a better life
Seamlessly connecting our customers to a better life Interim Results Presentation 2024
Slide 51: Revenue growth supported by IT Business growth
Revenue growth supported by IT Business growth Revenue EBITDA & EBITDA margin Rm Rm 6 996 6 403 6 135 4.2% 24.6% 842 733 553 3 195 2 851 2 730 12.0% 11.4% Converged 9.0% 3 801 3 552 3 405 Comms IT Business H1 FY23 H1 FY24^ H1 FY25 H1 FY23 H1 FY24 H1 FY25^^ IT Business revenue Converged Communication