TelkomSASOCLimited(Registrationnumber1991/005476/30)JSEsharecode:TKGISIN:ZAE000044897
GroupAnnualResultsFortheyearended31March2015
TheinformationcontainedinthisdocumentisalsoavailableonTelkomsinvestorrelationswebsitewww.telkom.co.za/ir
SpecialnoteregardingforwardlookingstatementsManyofthestatementsincludedinthisdocument,aswellasverbalstatementsthatmaybemadebyusorbyofficers,directorsoremployeesactingonourbehalf,constituteorarebasedonforwardlookingstatements.
Allstatements,otherthanstatementsofhistoricalfacts,including,amongothers,statementsregardingourconvergenceandotherstrategies,futurefinancialpositionandplans,objectives,capitalexpenditures,projectedcostsandanticipatedcostsavingsandfinancingplans,aswellasprojectedlevelsofgrowthinthecommunicationsmarket,areforwardlookingstatements.Forwardlookingstatementscangenerallybeidentifiedbytheuseofterminologysuchasmay,will,should,expect,envisage,intend,plan,project,estimate,anticipate,believe,hope,can,isdesignedtoorsimilarphrases,althoughtheabsenceofsuchwordsdoesnotnecessarilymeanthatastatementisnotforwardlooking.Theseforwardlookingstatementsinvolveanumberofknownandunknownrisks,uncertaintiesandotherfactorsthatcouldcauseouractualresultsandoutcomestobemateriallydifferentfromhistoricalresultsorfromanyfutureresultsexpressedorimpliedbysuchforwardlookingstatements.Factorsthatcouldcauseouractualresultsoroutcomestodiffermateriallyfromourexpectations,includebutarenotlimitedtothoserisksidentifiedinTelkomsmostrecentannualreport,whichisavailableonTelkomswebsiteatwww.telkom.co.za/ir.
Wecautionyounottoplaceunduerelianceontheseforwardlookingstatements.Allwrittenandverbalforwardlookingstatementsattributabletous,orpersonsactingonourbehalf,arequalifiedintheirentiretybythesecautionarystatements.Moreover,unlesswearerequiredbylawtoupdatethesestatements,wewillnotnecessarilyupdateanyofthesestatementsafterthedateofthisdocument,sothattheyconformeithertotheactualresultsortochangesinourexpectations.
TheinformationcontainedinthisdocumentisalsoavailableonTelkomsinvestorrelationswebsitewww.telkom.co.za/ir.
TelkomSASOCLimitedislistedontheJSELimited.InformationmaybeaccessedonReutersunderthesymbolsTKGJ.JandonBloombergunderthesymbolTKG.SJ.InformationcontainedonReutersandBloombergisprovidedbyathirdpartyandisnotincorporatedbyreferenceherein.Telkomhasnotapprovedorverifiedsuchinformationanddoesnotacceptanyliabilityfortheaccuracyofsuchinformation.
GroupsalientfeaturesFortheyearended31March2015
Allcommentary,messagingandindicatorsinthisreportexcluderetrenchment,voluntaryearlyretirementandseverancepackagecostsofR591million,therelatedtaximpactofR165millionandthetaxbenefitonthepostretirementmedicalaidpaymentofR546millionfortheyearended31March2015.ThecomparativenumbersexcludetheR2169millionnetcurtailmentgainonthepostretirementmedicalaidliabilityandtherelatedtaxbenefitofR246million.
HEPSat532,5cps,up+60%BEPSat542,3cps,up+135,7%GroupRevenueR31,7bnOperatingexpensesR17,7bnFreecashflowgenerated,strongatR3,9bnEBITDAexcludingonceoffitemsincreased15,1%toR9,0bn
Achievements*Netrevenueup3,1%toR26,0billion*Groupnetdebtdecreased92,8%toR151million*Freecashflowgeneratedincreased240,4%toR3,9billion*Mobilenetrevenueincreased174,1%toR954million*Mobiledatarevenueincreased50,6%toR988million*Activemobilesubscribersincreased21,2%to2186774withablendedARPUofR75,05*EBITDA,excludingtheoneoffitems,improved15,1%toR9,0billion*Headlineearningspershare,excludingtheoneoffitems,increased60,0%to532,5cents*Operatingexpenses,excludingdepreciation,decreased1,2%toR17,7billion
Challenges*Fixedlinevoiceusagerevenuedecreased13,5%toR6,9billion*22,0%decreaseinleasedlinerevenue
Improvements*Fixedlinedatarevenueincreased1,5%toR10,4billion*ADSLsubscribersincreased7,9%to1005286*Manageddatanetworksitesincreased1,0%to47599*Mobilesitesintegratedincreased3,4%to2510*MobileLTEsitesintegratedincreased11,3%to1317
OverviewJohannesburg,SouthAfrica8June2015,TelkomSASOCLimited(JSE:TKG)todayannouncedgroupannualresultsfortheyearended31March2015
MessagefromTelkomGroupCEOSiphoMasekoWearepleasedtoannounceourresultsfortheyearended31March2015.Onalikeforlikebasis,i.e.excludingitemsthatdonotformpartoftheresultsfromnormalbusinessoperations,netrevenueincreased3,1percenttoR26,0billion;whilegroupoperatingcosts,excluding
depreciation,weredown1,2percenttoR17,7billion.OurnormalisedEBITDAroseby15,1percenttoR9,0billion.
OurRetailConsumersegmentperformedwellwithexcellentresultsfromourmobilebusiness,whichincreaseditsnetrevenuesby174,1percenttoR954million.Fixedlinedatarevenueincreased1,5percenttoR10,4billionandmobiledatarevenueincreased50,6percenttoR988million.Wecontinuedtoseepressureonvoiceusage,particularlyinourEnterprisebusiness,resultinginan11,9percentdecreaseinfixedlinevoiceandinterconnectionrevenuetoR8,3billion.DespitethehighchurnratesinourConsumerbusiness,wegrewourADSLsubscribersby7,9percentto1005286.Revenuefromleasedlinefacilitiesremainedunderpressureanddeclined22,0percenttoR1395million.
Wesetouttoachievefurtherstabilityinthebusinessandlargelyattaineditunderchallengingconditions.Wearenearingthecompletionofthestabilityphaseofourturnaround,whichincluded:*Acontinuedstrengtheningofourbalancesheetwiththesettlementofthepostretirementmedicalaidliabilityforcertainpensionersandaddressingourfixedassetbase*Continueourcostinterventionstoensureasustainableandvariablecostbasegoingforward*MaintaininggoodcashmanagementwithfreecashflowofR3.9billion*Maintainingalowgearingratiowithverylownetdebttoenableustobenimbleaswemoveaheadwithplanstogrowourrevenuesorganicallyandinorganically*ContinuetofocusontheexecutionofourstrategyasweawaittheSouthAfricanCompetitionTribunal(CompetitionTribunal)decisionontheBusinessConnexionGroupLtd(BCX)transactionfollowingitsrecommendationforapprovalbytheSouthAfricanCompetitionCommission(CompetitionCommission),andouragreementwithMTNstillbeingreviewedbytheCompetitionCommission
Wepreviouslyindicatedthatwehaveimprovedcapitalexpenditureefficiency.Throughourdisciplinedapproachtowherewedeploycapitalwehaveachievedacapextorevenueratioof16,3percent.InordertodriveourconvergencestrategywecontinuetoinvestinanallIPnetwork.Wealsoinvestedinimprovingpartsofourmobilenetwork,wherenecessary.
Ournetdebtwasreducedby92,8percenttoR151millionandourfreecashflowincreasedtoR3,9billion.Ourhealthyfinancialpositionwillnotonlyallowustotakeadvantageofanypromisingopportunitiesthatcouldcomeourway,ithasalsomadeitpossibleforustopayadividendthisyear.
DeclarationofordinaryandspecialdividendOrdinaryfinaldividendnumber17of215centspershare(March2014:0centspershare)andaspecialdividendof30centspershareinrespectoftheyearended31March2015hasbeendeclaredpayableonMonday,20July2015toshareholdersrecordedintheregisterofthecompanyatcloseofbusinessonFriday,17July2015.Ourstrongfinancialpositionandhealthycashbalances
warrantsaspecialdividendof30centspershareaswereintroducedividend
paymentsforthefirsttimesince2011.Thetotaldividendapprovedbytheboard
istherefore245centspershare.Thedividendwillbesubjecttoalocaldividendwithholdingtaxrateof15percentwhichwillresultinanetfinaldividendof182,75centsperordinaryshareandnetspecialdividendof25,5centsperordinarysharetothoseshareholdersnotexemptfrompayingdividendwithholdingtax.Theordinaryandspecialdividendswillbepaidoutofcashbalances.
TheordinarydividendhasbeencalculatedwithreferencetoTelkomscurrentandfuturedebtandcashflowlevels.Thelevelofdividendpaymentsgoingforwardwillbebasedonanumberoffactors,includingtheconsiderationofthefinancialperformance,capitalandoperatingexpenditurerequirements,thegroupsdebtlevel,interestcoverage,internalcashflows,prospectsandavailablegrowthopportunities.
Thenumberofordinarysharesinissueatdateofthisdeclarationis522969350whichincludestheissuingof2185452ordinaryshareson4June2015tobeallottedintermsoftheTelkomemployeeshareplan.TelkomSASOCLimitedstaxreferencenumberis9414001710.
Salientdateswithregardtotheordinaryandspecialdividend2015DeclarationdateFriday,5June2015LastdatetotradecumdividendFriday,10July2015SharestradeexdividendMonday,13July2015RecorddateFriday,17July2015PaymentdateMonday,20July2015
SharecertificatesmaynotbedematerialisedorrematerialisedbetweenMonday,13July2015andFriday,17July2015,bothdaysinclusive.
OnMonday,20July2015,dividendsduetoholdersofcertificatedsecuritiesontheSouthAfricanregisterwilleitherbetransferredelectronicallytoshareholdersbankaccountsor,intheabsenceofsuitablemandates,dividendchequeswillbepostedtosuchshareholders.
DividendsinrespectofdematerialisedshareholderswillbecreditedtoshareholdersaccountswiththeirrelevantCSDPorbroker.
ProspectsWeexpectthechallengingoperatingenvironmentoftheyearunderreviewtoprevailintheyearahead,compoundedbyincreasingcompetitivepressuresandregulatoryinterventions.Ourresponsewillbetomaintaingoodcostdisciplineandacarefulandconsideredapproachtocapex,andtomakegooduseofourstrongbalancesheetbytakingadvantageofanynewopportunitiesforgrowth.
ThenextphaseofTelkomsturnaroundstrategycontinuesaswerepositionthebusinessforcommercialsustainability,whichwillallowustorealiseourambitionofconnectingSouthAfricans.Ouractionshavethusfardeliveredresults,butweneedtobecomemoreefficient.Wearereviewingourcurrentoperatingmodel.Amajorpartofthisreviewislookingatadeepfunctionalseparationbetweenourwholesaleandretailbusinesses.We
foreseeaninfrastructurebusinessunitwhichwillbeaccountablefornetworkdeploymentandnetworkefficiency.Forthisoperatingmodeltosucceed,wemusthaveanefficientandhighperformingnetwork.Wewillupdatethemarketregardingourplansduringthethirdquarterofthecalendaryear.
Wemustalsohaveahighlyefficientandcosteffectiveworkforce.Withinourworkforcetherearesignificantopportunitiestocreateahighlyskilledandproductiveteambyensuringthatemployeeshavetherightskillsandcapabilitiestosupportthechangingbusiness.Muchlikemosttelecomsoperatorsglobally,wemustmovetowardsaleanerandmoreproductiveworkforce.Aspreviouslyindica
