Telkom's profit rises 6.5% in first quarter on back of strong growth in subscribers

Telkom continued to show positive momentum with profit up 6.5% on the back of strong growth in subscribers, it said on Tuesday in a trading update for the first quarter ended June 30, 2025.

Earnings before interest, tax, depreciation and amortisation (Ebitda) rose to to R2.79 billion.

This as group revenue rose 1.1% to R10.82bn with group data revenue growth of 7.1%.

Telkom Consumer's mobile service revenue increased by 7.8%, gaining value market share as it continued outpacing South African market growth rates. Subscribers demonstrated strong growth, with mobile data users growing an exceptional 27.5% year-on-year and making up 72.1% of total mobile subscribers of 17.2 million. The Mobile business grew total external revenue by 7.2% to R6.2bn. On the fibre side, Telkom experienced a 6.6% increase in the subscriber base.

Telkom said the performance of data revenue gave it the confidence that it is heading in the right direction to achieve its new medium-term guidance of mid-single digit growth.

Openserve's overall revenue increased by 2.8% to R3.1bn delivering strong results, driven by 11.3% growth in fibre data revenue delivering positive top line growth. The business unit exceeded its targeted 50% fibre connection rate as it connected an additional 107 907 homes year on year and has now passed 1.4 million homes.

The performance of BCX disappointed. The deliberate moderation of hardware and software sales, together with the managed migration of legacy services to fibre solutions, saw revenue decline by 8.3% to R 2.91bn.

Group CEO Serame Taukobong said, "We are pleased to report solid results for the first quarter, building on last year's strong results. Our data-led strategy continues to be the competitive advantage enabling us to sustain our momentum into FY2026 and the increased contribution by mobile data and fibre-based services to total revenue is consistent with the assumptions supporting our medium-term objectives.

"Our ongoing focus on operational excellence across our business units as well as the OneTelkom way of winning continued to drive sustained performance, and we remain focused on delivering results as we build the backbone of South Africa's digital future," he said.

Taukobong said Telkom was optimising selling channels, continuously improving customer experience on its networks and providing customer-centric value with affordable and flexible offerings to seamlessly connect customers as it digitally transform South Africa. This had resulted in improved profitability for the Group with Ebitda growing by a solid 6.5%.

He said he was confident this momentum will continue throughout 2026. However, Taukobong said excellent Telkom results were disappointingly affected by the BCX performance, with BCX revenue declining by 8.3% while its annuity-based revenue remained flat. 

"Aligned with our focus on delivering results, a specialised team is in place to continue with its work to effect a faster BCX turnaround," he said.

Telkom said its financial position remains strong following the settlement of R4.75bn interest-bearing debt post-year end, from the R6.6bn proceeds from the Swiftnet disposal concluded in 2025.

It said R500 million of the Swiftnet proceeds was returned to shareholders as a special dividend on July 14, 2025, while the remainder of proceeds have been retained to maintain financial flexibility for growth opportunities. This as R158 million proceeds were received during the quarter from eight of the 30 non-core property portfolio sales in the prior financial year, further contributing to liquidity. The cash from the remainder of the non-core properties sold for R121m, is expected to be received during the year.

Looking ahead, Telkom Consumer remains focused on growing service revenue through regional expansion and will continue investing in competitive value propositions, targeted campaigns, and strategic network expansion.

It said Openserve's connect-led strategy, clearly evidenced in this quarter's top line growth, can be expected to accelerate the adoption of fibre-based services, while driving sustainability through ongoing network simplification and energy transformation programmes.

BCX remains focused on expanding the cloud and software portfolios and driving operational efficiencies, while a specialised team is working to effect a faster turnaround.

Telkom said, "We are on track with our data-led journey to deliver sustained performance, actively shaping Telkom to improve returns while preserving our core strengths. We remain focused on enhancing the Group's growth trajectory and margin expansion across our portfolio in line with medium-term guidance."

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