Telkom Sa Soc Ltd. · JSE:TKG
Telkom Sa Soc — FY2013 Earnings Presentation
21 slides from Telkom Sa Soc's earnings presentation, 2013
Slide 1: Group Annual Results for the year ended 31 March 2013
Telkom SA SOC Limited Group Annual Results for the year ended 31 March 2013 1
Slide 2: We have a unique, unrivalled fixed line network
We have a unique, unrivalled fixed line network Telkom’s national fibre network • Largest footprint in SA › 80% of total fibre – over 147,000 km • Network upgrade funded through cash from operations • Upgrade will yield speeds of up to 40Mbps and reduced fault rates • Enable true converged offering
Slide 3: Sipho Maseko, Group Chief Executive Officer
Sipho Maseko Group Chief Executive Officer 3
Slide 4: Telkom plays a mission critical role in South Africa
Telkom plays a mission critical role in South Africa • Linking Africa to the world › Submarine cables › Terrestrial fibre connecting SADC countries › Global VPN spans 70 countries & 700 cities › 3 major satellite service stations • Reliably transmitting mega data at high speeds • Lifeblood to South
Slide 5: There are significant challenges to address
There are significant challenges to address • Financial performance › Declining revenue › High cost structure • Relationship with government • Regulatory management • Position in Mobile • Customer service and brand perception 5
Slide 6: We have substantial assets and capabilities...
We have substantial assets and capabilities... Strategic advantage Focus areas Telkom Wholesale & Networks • Unrivalled network infrastructure • Rollout of NGN programme • Ability to transmit mega data • Enhance efficiencies and competitive capability at high speeds and reliably • Grow wholesale cap
Slide 7: ...which we are leveraging
…which we are leveraging Strategic advantage Focus areas Telkom Consumer • Fixed voice customer base • Efficiency improvement › Call centres • Fixed data capability › Field force • Mobile data capacity • Developing and launching new products • Opportunity of 4G spectrum • Improving customer experien
Slide 8: Impairment 'resets the base'
Impairment ‘resets the base’ Rationale Effect of impairment • Technological changes in favour of • Non-cash flow item and does not mobile competitors impact business prospects • Share trading at significant discount • Allows for competitive pricing to net asset value • Transition of service from old
Slide 9: Turnaround required – but the firm is not broken
Turnaround required – but the firm is not broken 2013 2012 % Profit after tax (Excluding impairment) R 501m R 179m 179.9 Headline Earnings R 444m R 1,658m (73.2) EBITDA R 7,109m R 8,546m (16.8) Mobile EBITDA loss R 1.7bn R 2.2bn 22.6 Capital investment R 5,738m R 4,783m 20.0 Free Cash Flow
Slide 10: Management takes accountability
Management takes accountability • We recognise frustration among our key stakeholders • Do not want to repeat mistakes of the past • We have a new, well functioning board and management team in place • Commitments to this transformation journey › Turn around financial performance › Restore confidenc
Slide 11: Jacques Schindehütte, Chief Financial Officer
Jacques Schindehütte Chief Financial Officer 11
Slide 12: Managing declining revenue while positioning for growth
Managing declining revenue while positioning for growth 2013 2012 % Operating Revenue R 32,501m R 33,079m (1.7) Operating Expenses* R 25,794m R 25,112m 2.7 EBITDA R 7,109m R 8,546m (16.8) Depreciation & Impairments R 18,156m R 6,138m 195.8 Capital Investment R 5,738m R 4,783m 20.0 Free Cas
Slide 13: Data revenues starting to lift its head
Data revenues starting to lifts its head (1.0%) 10.1% Voice and interconnection: R18,415m – 56.7% (2012: 59.0%) Data: 5.5% 33.2% R10,801m – 33.2% (2012: 30.9%) 56.7% Other: R3,285m – 10.1% (2012: 10.1%) Year on year revenue increase (5.7%) Year on year revenue decline
Slide 14: Voice revenue under pressure
Voice revenue under pressure 19 523 (5.7%) 18 415 (9.6%) 1.3% 9 501 8 591 7 743 7 643 (13.9%) (7.6%) 1 855 1 597 524 484 Total voice and Voice utilisation Voice subscriptions Mobile voice and Interconnection interconnection subscriptions 2012 2013 14
Slide 15: Data usage grows strongly and lifts revenue modestly
Data usage grows strongly and lifts revenue modestly 5.2% Subscribers 827 091 870 505 0.8% 523 057 527 291 13.9% 38 902 44 328 ADSL Internet all access Managed data network sites 2012 2013 Traffic Volumes in TBytes ZAR million 2013 2012 % ‘000 18 Data connectivity 5,595 5,339 4.8 15 Leased line faci
Slide 16: Group operating expenses
Group operating expenses (2.7%) 25 794 25 112 (14.2%) 9 861 (0.3%) 8 636 14.7% 7 216 7 193 (4.3%) 5 484 4 678 3 103 2 974 (13.5%) 936 825 Operating Employee Payments to other SG&A Service fees Operating leases expenses excl expenses operators depreciation 2012 2013 Includes the effect of voluntary s
Slide 17: Cash flow fundamentals remain sound
Cash flow fundamentals remain sound 2013 2012 % Cash flow from operating activities R 7,651m R 6,704m 14.1 Dividends (R 177m) (R 812m) (78.2) Investment activities (R 5,519m) (R 4,907m) 12.5 Reduction in term debt (R 731m) (R 1,586m) (53.9) Cash at end of year R 2,384m R 1,165m 104.6 Discretionary i
Slide 18: Sipho Maseko, Group Chief Executive Officer
Sipho Maseko Group Chief Executive Officer 18
Slide 19: Combination of performance improvement and strategic planning will help deliver the financial results
Combination of performance improvement and strategic planning will help deliver the financial results Performance Improvement Strategic Focus Areas Focus on operational efficiencies Focus on future operating model • Maximising NGN efficiencies and • Defining mid to long term strategy returns and pla
Slide 20: We are taking bold action to improve the business
We are taking bold action to improve the business • Conservative financial management • Investing to secure future of business • Raising the metabolic rate of the firm through short-term interventions • Eliminating loss-making services and improving operational efficiency • Focusing on profitable se
Slide 21: Thank you
Thank you 21