Q1 2025 Telkom SA SOC Ltd Trading Statement Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Myuran Rajaratnam - Metal Industries Benefit Funds Administrators - Analyst : Well done for a good quarter. I suppose, I've got two questions and one comment, if I can. Just to confirm, I suppose it's more a clarification on the first one. Your mobile data traffic seems to be accelerating. If you just look at Q3, Q4 last year and Q1 this year, the run rate seems to be accelerating. Is that correct? Mobile data traffic.

Question: Myuran Rajaratnam - Metal Industries Benefit Funds Administrators - Analyst : I can do that as well. Okay. I'll ask the second question. I'll keep the comments for the end, if I can. So the second question is, at the full-year results, in the presentation, you pointed out that you optimized roaming for the mobile network and that the mobile roaming costs were down 8.5%, if I remember correctly, for best FY24 versus FY23. Now in Q1 '25 versus the comparable quarter last year, how much did the mobile roaming cost come down by? If you can give us some steer there, that would be great. So if you'd answer these two, if you can.

Question: Myuran Rajaratnam - Metal Industries Benefit Funds Administrators - Analyst : Do you want the comment as well? Okay. So I'm seeing your Chairman on Wednesday, and we are shareholders. And you mentioned before, Serame, that a range of anything between 8 to 14 is typically for fiber businesses. But this quarter, you've shown to some extent, the fiber-to-the-home business has pricing power. The fact that your ARPUs are going up. And we've seen that in the mobile postpaid business in South Africa so far for

Question: Jonathan Bradley - Absa Group - Analyst : Just three from me, please. Firstly, on Telkom Mobile. Just postpaid subscribers have been largely flat over the past year. Are you expecting to aggressively push on the postpaid side again in the near future? Or is this sort of the level you're looking to remain at. And most of the growth from year on out will be from sort of price increases in postpaid and then growing the repaid base? And then secondly, just tied to that first question on prepaid pricing, are you planning to lift headline pricing in line with your competitors? Or is there still more to do on the CVM side before you look at headline pricing? And then lastly, just on the outlook for CapEx in the mobile business this year on EBITDA, given the robust data traffic growth. And last year, you sort of spent a bit less than more. So just outlook for CapEx on the mobile business view. Thanks very much.

Question: Nadim Mohamed - SBG Securities (Pty) Limited - Analyst : Good afternoon, congratulations on the good results. Just speaking from my side on mobile. Firstly, just on your prepaid subscriber acquisition, there seems to be an acceleration in the last few quarters. Looks like these are not low-value sellers because your ARPU has only gone down by 1% compared to the last quarter. I just want to get some color into what's going on in the market. Are you taking any share from specific competitors? And on the trajectory of that, do you think you can continue acquiring customers at this kind of pace? Secondly, if I look at the data volume growth of 26% relative to the data revenue growth of 13% year on year, it looks like you're giving away a lot less volume relative to the revenue growth, and your competitors seem to be giving away a lot more volume to get the revenue. I want to get a sense of how you differ from them, what could you be doing differently in this market to achieve those kind of outcomes. And lastly, just to give us some color on the improvement in mobile, because the margins are between 6.8%, sort of understand what are the two or three main contributors towards that margin expansion.

Question: Madhvendra Singh - HSBC - Analyst : Congratulations on good set of results. So I have three small questions. So given the margins are now back to 25% should we take this as a base going forward? Or there were some one-off mix? And second one is how strong mobile performance is likely to remain given the weak performance of other operators in South Africa and given the weak macro outlook also. Third one is about any other assets that you plan to monetize it we didn't. Thank you.

Question: Madhvendra Singh - HSBC - Analyst : Yes. First one is the extension of what Nadim asked, given the margins are now back to about 25%. Should we take this as a base going forward?

Question: Preshendran Odayar - Nedbank Capital - Analyst : Congratulations on the results, very strong performance from the guidance in this first quarter. I've seen that all the easier questions were answered and you got a bit of time on the challenge slightly easier one, if you don't mind, Serame. First one, can you give us an update of where gearing is at the end of this quarter, but it's not going to be materially different, but I just want to see how some of the EBITDA initiatives that you had. I mean the strong outperformance has floated into your gearing levels at the end of this first quarter. Second question is a bit of a follow-up on Myuran's question. I don't know if you can give us some detail on how much are you actually spending on roaming, and that's across your 2G and your, out of data roaming. I mean, I know a few -- I don't think it was last year. I think it was 1.5 years ago, in one of the presentations you gave a percentage of service revenue. I don't know if you can share that with us and also on the China later, the percentage split of roaming between the two leading partners that you now have? And then the last one, part of your announcement of the Phase 2 of BCX restructuring, would you be able to give us an impact an assessment of what you think the EBITDA impact and potentially a cash impact might be either for this year or will this carry on into next year? That's it. Thank you.

Question: Jonathan Kennedy-Good - Prescient Securities (Pty) Ltd - Analyst : Just two quick questions from me. First of all, with the change in government and some chances of improving sentiment in corporate. So just wondering how your pipeline looks at BCX on hardware sales, software sales, if the loosening in the budgets that corporates are deploying in those lines. And then also on your credit impairment side, in terms of realized credit losses on your accounts receivables, particularly with government. Is there any improvement there? Or is it just too early to tell? Thank you.

Question: Jonathan Kennedy-Good - Prescient Securities (Pty) Ltd - Analyst : And then just on the credit impairment side, sir?

Question: Myuran Rajaratnam - Metal Industries Benefit Funds Administrators - Analyst : You mentioned earlier that your roaming revenues, roaming costs as a percentage of revenue is 5% for this quarter. Can you give us --

Question: Myuran Rajaratnam - Metal Industries Benefit Funds Administrators - Analyst : Yes, exactly. And can you give us a sense, firstly, you've been optimizing, from what I read for the last year, you've been optimizing the traffic to give to your partner, roaming partners. But you're also busy negotiating a new revenue contracts with your mobile partners. So is it more the less traffic that you've optimized that gives you the benefit of less cost? Or is it the new contract that -- I presume you signed it? Or are you busy to sign the term? Where are we on those things? I have a follow-up.

Question: Myuran Rajaratnam - Metal Industries Benefit Funds Administrators - Analyst : Right. And if I can just ask the follow-up, that 5% of revenue, so I'm talking about the 5% of cost that's roaming cost as percentage of mobile revenue, part of it's voice roaming and part of it's data roaming, right? Now, which is the bigger component here? Do you spend more on voice roaming or do you spend more on data? I'm not talking about traffic. I'm talking about rands and cents here.

Question: Myuran Rajaratnam - Metal Industries Benefit Funds Administrators - Analyst : Yes. That's why I'm asking about rands and cents. Which is bigger? Is it voice rands and cents you're paying Vodacom or MTN or data rands and cents?

Question: Myuran Rajaratnam - Metal Industries Benefit Funds Administrators - Analyst : Yes. No, I just wanted a sense of it.

Question: Myuran Rajaratnam - Metal Industries Benefit Funds Administrators - Analyst : Well done, guys. Good quarter.