Telkom Sa Soc Ltd. · JSE:TKG
Telkom Sa Soc — H1 FY2013 Earnings Presentation
26 slides from Telkom Sa Soc's earnings presentation, November 2012
Slide 1: Group Interim Results for the six months ended 30 September 2012
Telkom SA SOC Limited Group Interim Results for the six months ended 30 September 2012
Slide 2: Remaining focussed and determined in uncertain times
Remaining focussed and determined in uncertain times “Telkom is engaged in constructive dialogue with its key stakeholders to chart a more successful way forward. Strategically, Telkom has reached a pivotal cross road. While we anticipate government providing a clear understanding of its strategic d
Slide 3: Headwinds for Telkom are significant but can be overcome
Headwinds for Telkom are significant but can be overcome • Operational execution on current strategy evident • Future of fixed-line business • Inappropriate termination rate regime • Rigid cost structure • Regulatory obligations • Government engagement Telkom SA Limited Group Interim Results for the
Slide 4: Clarity from government critical to restore confidence and chart a successful way forward
Clarity from government critical to restore confidence and chart a successful way forward • Board stability − Corporate governance − Strengthen board • National incumbent vs. listed company priorities − Developmental versus commercial objectives • Capability Gaps − Reduce execution risk on Mobile, N
Slide 5: We are committed to ongoing dialogue with our shareholders
We are committed to ongoing dialogue with our shareholders Short-term priorities Process going forward • Management stability • Re-constitution of the board − Succession plans in place • Appointment of Chairman • Focus on business priorities • Appointment of board committees • Appointment of CEO • N
Slide 6: Our strategy remains focussed on achieving leadership in data and convergence
Our strategy, as it stands, remains focussed on achieving leadership in data and convergence • Data & broadband Lead in data: • Convergence • Grow Telkom Business revenue by diversifying the service portfolio • Regain market competitiveness in the consumer market • Consolidate our position as wholes
Slide 7: Operational and managerial priorities to support improved execution
Operational and managerial priorities to support improved execution • Complete transformation to an all IP enabled network • Build a differentiated mobile data network • Roll out high speed fixed broadband network • Optimise capital structure and improve cost efficiencies • Inculcate fit for purpose
Slide 8: Results reflect the tough environment faced by fixed-line incumbents
Results reflect the tough environment faced by fixed-line incumbents • Operating revenue of R16.1bn (1.5%) ~ • Operating expenses of R15.6bn (1.6%) ~ • EBITDA (excl. mobile) R4.3bn (19.7%) • EBITDA (incl. mobile) R3.6bn (17.7%) • Headline earnings for the period R190m (80.6%) • Profit after tax for
Slide 9: Key factors impacting performance
Key factors impacting performance • Decline in voice revenues • 3% growth in data • Mobile business on track but challenges remain • Infrastructure competition growing • Increasing costs • Cost of network transformation • Provision for Competition Tribunal penalty Telkom SA Limited Group Interim Res
Slide 10: Business review – Telkom Business
Business review – Telkom Business • Solid sales performance and healthy pipeline of deals • Continued excellence in project delivery and service levels to Corporate customers • Return to growth of data revenues • Highlights Launched FMC commercial bundles offering pre-packaged voice, data and combo
Slide 11: Telkom Business: Progress on business deliverables
Telkom Business: Progress on business deliverables We said We delivered • Launched core SMBS offerings (accounting, Launch productised payroll) cloud services • Hosted exchange was also launched Launch pre-packaged & • Launched pre-packaged and tailor-made FMC tailor-made FMC bundles bundles • Intro
Slide 12: Business review – Telkom Consumer
Business review – Telkom Consumer • Roll out of the 40 Telkom Express stores and 30 3rd Party retail channels • NGNEC pilot launched • Customer service experience improvements Highlights − Flexible and Simplified Broadband service − Simplified customer interface processes − Resolving 85% of billing
Slide 13: Telkom Consumer: Progress on business deliverables
Telkom Consumer: Progress on business deliverables We said We delivered Rationalise & simplify • Reduced product catalogue fixed voice portfolio • Enhanced ‘Closer’ bundles enabling addition of mobile minutes Improve entry level • Upgraded product speeds from 384kbps to 1024kbps broadband product •
Slide 14: Business review – Telkom Mobile
Business review – Telkom Mobile • Prepaid subscribers increased 52.4% to 1.1 million since September 2011 • 2.2% market share (0.9% September 2011) • Improved on net voice (65.4%) and data (93.6%) traffic volume • Improved product offerings: Prepaid offer (8.ta more), Unlimited voice, Highlights Sma
Slide 15: Telkom Mobile: Progress on business deliverables
Telkom Mobile: Progress on business deliverables We said We delivered • 2,067 Base stations constructed Build a data network • LTE testing trial • Other data solutions are being evaluated Increase distribution • Roll out of Telkom Express stores on track through direct channels • 2 New Flagships lau
Slide 16: Business review – Wholesale and Networks
Business review – Wholesale and Networks • Renewed focus on customer service delivery – implementing geographical and customer service differentiation • Network Transformation on track: − Replacement of the first TDM access switch with an all IP concentrator − High speed broadband pilot launched − G
Slide 17: Business review: Wholesale and Networks
Business review: Wholesale and Networks We said We delivered Enable the network to • Upgrades of the 1Mbps to 2Mbps completed support higher entry level • Upgrade of the 384 Kbps to 1Mbps commenced - to be fixed-line broadband completed by end November 2012 access speeds • Close to 200 000 10Mbps se
Slide 18: Financial overview
Financial overview Jacques Schindehütte
Slide 19: Results reflect the tough environment faced by fixed-line incumbents
Results reflect the tough environment faced by fixed-line incumbents • Operating revenue of R16.1bn (1.5%) ~ • Operating expenses of R15.6bn (1.6%) ~ • EBITDA (excl. mobile) R4.3bn (19.7%) • EBITDA (incl. mobile) R3.6bn (17.7%) • Headline earnings for the period R190m (80.6%) • Profit after tax for
Slide 20: Group revenue contribution
Group revenue contribution 3.0% 0.8% Fixed-line data: R5 210m – 32.3% (Sept 2011: 30.9%) 23.9% 32.3% Voice subscriptions: R3 858m – 23.9% (Sept 2011: 23.3%) Voice usage: R4 408m – 27.3% (Sept 2011: 30.0%) Interconnect: R843m – 5.2% (Sept 2011: 5.1%) CPE: R503m – 3.1% (Sept 2011: 3.3%) Subsidiaries &
Slide 21: Fixed-line revenue
Fixed-line revenue 15,345 (3.1%) 14,867 (10.2%) 3.0% 0.8% 5,210 5,057 4,909 4,408 3,858 3,829 1.1% (6.2%) 843 834 536 503 Total fixed-line Voice usage Voice Interconnection Data CPE subscriptions Sept 2011 Sept 2012 Telkom SA Limited Group Interim Results for the six months ended 30 September 2012 2
Slide 22: Data usage grows strongly and lifts revenue modestly
Data usage grows strongly and lifts revenue modestly 5.8% 841,831 795,419 (7.3%) Sept 2011 Sept 2012 Subscribers 556,886 516,423 8.3% 40,284 37,181 ADSL Internet all access Managed data network sites ZAR million Sept 2012 Sept 2011 % Data connectivity 2,761 2,657 3.9 Leased line facilities 1,160 1,1
Slide 23: Group operating expenses
Group operating expenses (4.3%) 4,738 4,542 (14.2%) 7.4% 3,567 3,190 3,124 2,953 7.4% 2,653 2,458 0.3% 1,476 1,472 (11.3%) 442 397 Employee Payments to other SG&A Service fees Operating leases Depreciation, expenses operators amortisation, impairments Telkom SA Limited Group Interim Results for the
Slide 24: Group capital expenditure
Group capital expenditure ZAR million Sept 2012 Sept 2011 Mar 2012 Total 2 123 1 805 4 783 Group capital expenditure excluding Mobile 1 602 1 247 3 411 Converting access network to IP (NGN) 276 - 211 Maintaining/ Enhancing existing Telecoms & IT 1 326 1 247 3 200 Networks Mobile 521 558 1 372 Telkom
Slide 25: Capital expenditure largely funded by internally generated cash
Capital expenditure largely funded by internally generated cash • Medium term debt maturities R3.8bn • Cash balances at 30 September 2012 R4.8bn • Three year capital expenditure R18 - 21bn • Debt market < R4bn • Debt to EBITDA < 140% Telkom SA Limited Group Interim Results for the six months ended 3
Slide 26: Thank you
Thank you