Telkom Sa Soc Ltd. · JSE:TKG
Telkom Sa Soc — FY2024 Earnings Presentation
59 slides from Telkom Sa Soc's earnings presentation, 2024
Slide 1: Annual Results Presentation 2024
Seamlessly connecting our customers to a better life Telkom SA SOC Ltd Annual Results Presentation for the year ended 31 March 2024 Confidential Annual Results Presentation 2024
Slide 2: Disclaimer
Disclaimer Many statements in this document and verbal statements that may be made by Telkom or officers, Directors or employees acting on Telkom’s behalf constitute or are based on forward-looking statements. All statements, other than statements of historical facts, including, among others, statem
Slide 3: Content
Content 1 FY24 Financial 3 Highlights Review 2 Business Units Outlook and 4 Reviews priorities Annual Results Presentation 2024 3
Slide 4: FY24 Highlights
1 FY24 Highlights Serame Taukobong Group Chief Executive Officer
Slide 5: OneTelkom: Internally aligned, externally executed
OneTelkom: Internally aligned, externally executed Purpose: Seamlessly connecting our customers to a better life Fibre +170,000 km of fibre (Fixed network) +1.2 million homes passed Drive capital efficiency Mobile +7 100 4.5G integrated sites (Mobile network) +400 active 5G sites Protect & sweat rel
Slide 6: Telkom leveraging InfraCo assets for growth
Telkom leveraging InfraCo assets for growth Focused investment in Delivering on our Driving growth in Driving Group Fibre Assets data-led strategy Enterprise services property efficiencies • Leadership in FTTH connectivity rate • 3rd largest MNO operator • Africa’s leading systems integrator • Manag
Slide 7: Invested to fortify our mobile and fixed networks
Invested to fortify our mobile and fixed networks We mitigated loadshedding with our network resilience plan Resilient Reduced mobile Improved Lower diesel consumption mobile roaming traffic network and fixed by 1% and availability 15% reduction in diesel consumption networks costs by 8.5% for backup g
Slide 8: Swiftnet disposal approved by shareholders
Swiftnet disposal approved by shareholders Focusing on Improving Regulatory approvals core businesses financial position in progress • 100% disposal of non-core asset • Pay down interest-bearing debt • Parallel submissions to ICASA and • Sale agreement with Actis Infra Fund and - Reduce net debt to
Slide 9: Group highlights - Total Operations
Group highlights - Total Operations Group up by 1.6% up 201.3% revenue to R43.2 billion HEPS to 376.0 cents per share NGN up by 7.0% up 442.8% BEPS revenue to R34.4 billion to 385.5 cents per share up by 5.2% up by R3.1 billion Normalised EBITDA1 Free cash flow to positive R424 million to R10.0 billi
Slide 10: Our operational framework drives performance
CONFIDENTIAL Our operational framework drives performance Grow Improve Operational Disciplined revenue profitability Excellence capex allocation • Grow NGN revenue streams • Sustainable cost • Network expansion and • Capital & Operational management resilience productivity • Migrate legacy to next -
Slide 11: Business Units Reviews
2 Business Units Reviews Serame Taukobong Group Chief Executive Officer
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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 Rm Rm Rm 11.9% 2 946 20 439 6.8% 10.6% 12.6% 19 026 17 819 17 505 2 961 18 262 2 667 16 936 27.2% 4 726 14 300 4 893 4 942 22.2% 12 926 12 563 20.5% 5 252 5 12
Slide 14: Mobile network designed to enable data-led strategy
Mobile network designed to enable data-led strategy Broadband subscribers Broadband traffic 4.5G integrated sites Improved network coverage ‘000 Petabytes & capacity 9.5% 21.4% 4.7% • Extensive deployment of Sub1Ghz 12 741 7 125 • 82% - 4G population coverage 1 417 • 89% - customers are 4G and 5G 11
Slide 15: Report cable theft to Crime Hotline
Report cable theft to Crime Hotta tenn MAX) Vi i
Slide 16: NGN revenue growth driving cost efficiencies
NGN revenue growth driving cost efficiencies Revenue NGN Revenue1 Revenue contribution split EBITDA/EBITDA margin Rm Rm Rm 3.0% 6.3% 6.6% 5 500 13 428 30. 0% 12 897 32.7% 12 511 5 000 31.4% 9 261 28.6% 24% 8 716 20. 0% 31% 4 500 40% 7 909 10. 0% 4 000 3 500 0. 0% 3 000 - 10.0% 4 385 2 500 3 934 76%
Slide 17: Our connect-led strategy continued to drive the highest connectivity rate
Our connect-led strategy continued to drive the highest connectivity rate Homes passed with fibre Fibre homes connected Fixed line broadband data Fixed line broadband Connectivity Rate consumption services 17.0% 19.8% Petabytes 21.7% Services (‘000) 12.0% 700 000 48.5% 718 47.4% 40. 0% 600 000 46.3%
Slide 18: Transforming service delivery through our customer-centric approach
Transforming service delivery through our customer-centric approach Net Promoter Score (NPS) Fibre Broadband Average Assurance Visits Time to Install 2.5% Days 3.2% 48.9% 319 027 220 609 3.13 69.7 68.0 66.1 2.51 2.43 112 822 FY22 FY23 FY24 FY22 FY23 FY24 FY22 FY23 FY24 Broadband Access Transport Cor
Slide 19: CONFIDENTIAL Internal Confidential
CONFIDENTIAL Internal Confidential Use
Slide 20: Good IT revenue growth
Good IT revenue growth Revenue IT Business revenue Converged Communications EBITDA & EBITDA margin Rm Rm revenue Rm 2.3% 9.9% Rm 14.5% 28.4% 7 274 14 280 6 608 1 852 13 216 1 807 12 915 1 272 7 262 7 007 1 029 5 653 6 608 1 346 2 474 7 274 2 160 5 653 6 608 2 118 3 022 1 294 2 734 2 601 CPE and 13.0
Slide 21: Confidential
Confidential
Slide 22: Continued revenue and earnings growth
Continued revenue and earnings growth Revenue EBITDA & EBITDA margin Rm Rm 1.3% 10.4% 74.9% 70.4% 68.8% 1 1 0 0 8 0 . % 1 0 0 7 0 . % 9 0 6 0 . % 8 0 5 0 . % 1 292 1 304 1 321 7 0 4 0 . % 6 0 909 896 990 3 0 . % 5 0 2 0 . % 4 0 1 0 . % 3 0 2 0 0 .0 % FY22 FY23 FY24 FY22 FY23 FY24 Annual Results Pres
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Slide 24: Property portfolio optimisation and ESG focus
Property portfolio optimisation and ESG focus Accelerated • Realised R92 million from 56 properties sold decommissioning of • R287 million valued properties undergoing transfer process non-core properties • More non-core properties earmarked for disposal Reduced Telkom’s • Implemented multi-vendor d
Slide 25: Financial Review
3 Financial Review Nonkululeko Dlamini Group Chief Financial Officer
Slide 26: Solid Group financial performance
Solid Group financial performance Total operations Revenue BEPS 1.6% 442.8% R43.2bn 385.5 cps Normalised EBITDA HEPS 5.2% 201.3% R10.0bn 376.0 cps 0.8 EBITDA margin Net debt to EBITDA ppts 0.1x 23.2% 1.7x Profit after tax Free Cash Flow (FCF)* 443.6% 115.6% R1.9bn R424m * Includes restructuring and
Slide 27: Summarised Group Income statement
Summarised Group Income statement Restated Reported Normalised3,6 • Delivered improved financial Rm FY20245 FY20235 % % results despite inflationary pressures Revenue1 43 230 42 5341 1.6% • Revenue improved 1.6%, EBITDA2 10 041 8 4802 18.4% 5.2% driven by an increase in mobile data and fixed data EB
Slide 28: Group revenue supported by growth in new generation revenue
Group revenue supported by growth in new generation revenue Total operations FY23 FY24 Revenue by stream Rbn 1.6% 7.0% 4.5% R2.3bn 42.5 43.2 34.4 15.0% 22.6 10.4% 22.7% 14.8% 14.5% 4.2% 32.1 (R1.5bn) 21.6 10.4 8.9 5.6 6.1 4.9 5.6 4.3 3.3 3.1 3.0 2.7 2.9 Group Mobile Information Fixed voice and Tradi
Slide 29: EBITDA underpinned by next generation revenue growth and cost containment
EBITDA underpinned by next generation revenue growth and cost containment EBITDA movement FY23 FY24 Total operations Rm 5.2% R496m 0.8 ppts 1 626 971 544 41 60 576 292 10 041 9 545 22.4% 23.2% Normalised FY23 Fixed voice CPE & handset Operating Other items* Direct expenses Information Data revenue F
Slide 30: Strong underlying earnings growth
Strong underlying earnings growth HEPS movement Total operations Cents per share FY23 FY24 442.8% 201.3% 422.8% 201.3% 9.5 314.5 385.5 385.5 376.0 376.0 124.8 71.0 71.0 Basic EPS HEPS Normalised Basic EPS Increase in profit Basic EPS FY24 HEPS adjustments HEPS FY24 FY23 Annual Results Presentation 2
Slide 31: Strong earnings growth for continuing operations
Strong earnings growth for continuing operations HEPS movement Continuing operations Cents per share FY23 FY24 2970.1% 372.3% 2970.1% 372.3% 9.7 288.1 297.8 288.1 297.8 288.1 9.7 61.0 9.7 Basic EPS HEPS Normalised Basic EPS Increase in profit Basic EPS FY2024 HEPS adjustments HEPS FY2024 FY2023 Annu
Slide 32: Strong FCF improvement from underlying business
Strong FCF improvement from underlying business Free cash flow (FCF) movement Finance charges paid up 58.2% Rm FY24 FY23 % Finance charges paid increased 58.2% attributable to the Cash generated from operations excluding restructuring cost paid 11 303 6 705 68.6 higher average cost of debt and a mar
Slide 33: Cash generated from operations improved
Cash generated from operations improved Cash generated from operations movements Rm R1 915m 68.6% R4 598m 1 068 2 053 138 550 893 1 956 11 303 10 235 6 705 FY23 Profit before tax Net finance charges Non-cash items Increase in cash Increase on cash paid FY24 Add back: Normalised Adjusted FY24 and fai
Slide 34: Capex driven by sustainability and effectiveness
Capex driven by sustainability and effectiveness Capex spend and intensity Capex investments allocation Rm Network expansion FY24 FY23 Capex spend FY24 Capex to revenue (%) 11% Fibre to homes passed 1 217 110 1 040 565 5% Homes connected 590 527 492 819 7% 35% Active fibre connectivity rate % 48.5 4
Slide 35: Strong balance sheet
Strong balance sheet Total operations Rm FY24 FY23 % Cash balances 3 939 3 469 13.5 Interest bearing debt 14 217 14 356 1.0 Credit Loan Opening balance 14 356 11 932 (20.3) matrix covenants FY24 FY23 Net funding (repaid)/raised (150) 2 320 106.5 Other 11 104 89.4 Net debt to Not exceed 1.7x 1.8x Lea
Slide 36: Medium term guidance met, capex guidance revised
Medium term guidance met, capex guidance revised Medium term guidance Inputs Drivers FY24 Actual* Outputs FY23 – FY25 (CAGR) New revenue streams Low to mid-single digit 1.6% (Fibre, Mobile & IT businesses) Revenue growth Sustainable cost Annual management program Low to mid-single digit 5.2% Sustain
Slide 37: Reinstatement of dividend
CONFIDENTIAL Reinstatement of dividend New dividend policy: Positive free Annual pay-out ratio Strength of balance Solvency and liquidity cash flow of 30% to 40% of FCF sheet takes priority requirements as per No interim dividend due to Future capex obligations will the Companies Act cyclical nature
Slide 38: Capital allocation framework
Capital allocation framework 1 Inputs 2 Sources of Capital 3 Uses of Capital • Operational cashflow and • Growth, maintenance & cash release initiatives regulatory capex • Debt issuance • Strengthen balance sheet • Alternative funding solutions • Dividends • Corporate actions Annual strategic plannin
Slide 39: Outlook & Priorities
4 Outlook & Priorities Serame Taukobong Group Chief Executive Officer
Slide 40: Delivering on our promises: H2 priorities recap
Delivering on our promises: H2 priorities recap Data consumption drives growth Capex - prioritising growth areas and network availability • Mobile and fixed data traffic up • Capex invested in Mobile and Fibre • Mobile data and NGN fibre revenue up networks • Mobile broadband subscribers up • Networ
Slide 41: Challenging trading environment
Challenging trading environment Macro Backdrop • Low GDP growth • Moderating inflationary • Rand remains weak • Dynamic regulatory • Constrained consumer headwinds vs major foreign environment spending • Higher-for-longer interest currencies • Spectrum auction rate environment Industry Backdrop • In
Slide 42: FY2025 priorities
FY2025 priorities • Data consumption growth NGN revenue • FTTH passed and connected growth • Mobile subscriber growth • Growth of IT managed-services Cost optimisation • Ongoing opex management Our priorities Smart capex • Network expansion, prioritising growth areas: > Expand mobile network footpri
Slide 43: Well positioned to execute our data-led strategy as OneTelkom
Well positioned to execute our data-led strategy as OneTelkom The Team to Execute Mission Critical Digital Infrastructure • Highly experienced management team • Our infrastructure is difficult to replicate • Key recent appointees GCFO & GCDO • Leverage our infrastructure to drive • Focused on delive
Slide 44: Delivering as OneTelkom
Delivering as OneTelkom Journey to Culture refresh & Consolidated offering end of 2025 leadership alignment to deliver as OneTelkom Diverse critical Dispose Drive value digital assets - of non-core through One InfraCo assets core assets Telkom Annual Results Presentation 2024 44
Slide 45: Thank You Q&A
Thank You Q&A
Slide 46: Appendices
5 Appendices
Slide 47: Seamlessly connecting our customers to a better life
Seamlessly 10.6% connecting our Mobile data customers to a revenue increase better life 12.6% Mobile EBITDA growth 21.4% Mobile data traffic growth Interim Results Presentation 2023 47
Slide 48: NGN technologies driving growth
NGN technologies driving growth Consumer Operating Revenue Fixed-line NGN vs legacy split Consumer EBITDA/EBITDA margin Rm Rm 1.8% 24.2% 3 076 670 26 329 3 506 753 25 876 4 283 679 25 753 18.2% 15.5% 12.7% 28% 44% 59% 4 685 4 093 22 583 21 617 20 791 3 295 72% Other** 56% Fixed 41% NGN EBITDA margin
Slide 49: Growing customer base with stable prepaid ARPU
Growing customer base with stable prepaid ARPU Subscriber growth ARPU ‘000 R 11.9% 2.7% 2 946 20 439 18 262 16 936 212 201 2 961 180 2 667 90 86 84 17 493 15 301 14 269 Post-paid Post-paid Pre-paid 66 65 64 Pre-paid Blended FY22 FY23 FY24 FY22 FY23 FY24 Annual Results Presentation 2024 49
Slide 50: Mobile broadband traffic continues to grow
Mobile broadband traffic continues to grow Broadband subscribers Broadband traffic Mobile sites 4.5G integrated sites ‘000 Petabytes integrated 9.5% 21.4% 2.5% 4.7% 12 741 7 125 7 738 1 417 1 167 6 804 11 634 7 546 973 6 451 10 651 7 313 FY22 FY23 FY24 FY22 FY23 FY24 FY22 FY23 FY24 FY22 FY23 FY24 An
Slide 51: High 4G device penetration and growing 5G base
High 4G device penetration and growing 5G base 83% 4G • 89% of customers are 4G and 5G terminals • 58% of voice customers on Voice over LTE (VoLTE) • No legacy 2G network, all 2G 2G 5G 1% terminals terminals 9% terminals use roaming • 6% active 5G sites • 82% 4G population coverage 3G • 16% 5G popul
Slide 52: Seamlessly connecting our customers to a better life
Seamlessly connecting our customers to a 76.4% better life NGN revenue contribution up from 69.0% 48.5% Highest FTTH connectivity rate 31.4% EBITDA margin up from 28.6% Internal Confidential Use
Slide 53: Evolution of new generation revenue
Evolution of new generation revenue Carrier Revenue 1.1% Enterprise Revenue 0.2% Broadband Revenue1 7.9% Rm Rm Rm Legacy NGN NGN NGN NGN 2.5% 4.8% 16.1% 3 512 1 630 1 627 1 611 4 344 3 256 4 297 3 110 8% 3% 19% 15% 24% 15% 4% 25% 3 949 6% 92% 97% 81% 85% 85% 96% 76% 75% 94% FY22 FY23 FY24 FY22 FY23
Slide 54: Our connect-led strategy continued to drive the highest connectivity rate – 48.5%
Our connect-led strategy continued to drive the highest connectivity rate – 48.5% Homes Passed with Fibre Fibre Homes Connected Enterprise1 Carrier1 Connectivity Rate Business Circuits Circuits 17.0% 19.8% 0.1% -0.6% 700 000 48.5% 47.4% 40. 0% 600 000 46.3% 500 000 20. 0% 400 000 0. 0% 1 217 110 590
Slide 55: Fixed broadband evolution
Fixed broadband evolution Fixed line broadband data Fixed line Fixed line consumption broadband services broadband services Petabytes 21.7% Services (‘000) Services (‘000) 12.0% 718 641 9% 10% 605 19% 21% 32% 36% 2 307 1 895 91% 90% 1 665 81% 79% 68% 64% Below 20Mbps Legacy Access 20Mbps and higher
Slide 56: Legacy & voice revenues
Legacy & voice revenues Legacy & Voice Revenue1 Voice Revenue Rm Rm 30.7% 26.5% 4 749 3 798 11% 3 405 2 806 18% 13% 2 361 2 063 19% 16% 23% 71% 68% Interconnect 62% Usage Subscription FY22 FY23 FY24 FY22 FY23 FY24 1 Inclusive of Legacy and Voice Usage and Subscription Revenue Annual Results Presenta
Slide 57: Network Optimisation
Network Optimisation Network Site Optimisation Hybrid Solar Network Sites Network Central Offices 1746 1708 1680 50 Legacy Copper Exchanges 107 95 56 10 FY22 FY23 FY24 FY23 FY24 Broadband Access 99.86% Transport 99.85% Core 100.00% Availability Availability Availability Annual Results Presentation 2
Slide 58: Seamlessly connecting our customers to a better life
Seamlessly connecting our customers to a better life 4 047 Productive portfolio 18 Power-as-Service (PaaS) rolled out
Slide 59: Commercialised productive portfolio
Commercialised productive portfolio Tower portfolio (all site types) Productive portfolio growth (# of sites) (# of sites) 4 047 4 016 6 023 +76 -370 - 45 5 729 +76 FY2023 Decommissioned New Towers 1 FY2024 FY2023 Net 2 New Towers 1 FY2024 decommissioned Notes: Notes: 1: 76 New Towers is comprised o