Telkom’s Earnings Soar Amid Load-Shedding Reprieve

Telkom has reported a significant boost in earnings for the quarter ending 30 June 2024, largely due to the reduction in load-shedding, which has dramatically cut operational costs.

In its latest trading update, Telkom revealed that its earnings before interest, tax, depreciation, and amortization (EBITDA) saw impressive gains across its divisions. Telkom Consumer’s EBITDA rose by 28.4%, reaching R1.20 billion, while Telkom Mobile’s EBITDA surged by 35.7% to R1.54 billion. Additionally, Telkom Consumer and Telkom Mobile enjoyed EBITDA margin growth of 3.6 and 6.0 percentage points year-on-year, respectively.

The company attributed this strong performance to robust revenue growth combined with stringent cost-containment measures.

Openserve’s Performance and Cost Savings

Telkom’s wholesale fibre division, Openserve, also experienced solid EBITDA growth, fueled by a substantial R128-million reduction in diesel expenses.

“In addition to our network consolidation and simplification strategy, Openserve continued to execute on an improved green energy mix through the deployment of lithium-ion batteries and solar energy solutions, along with an enhanced diesel delivery model,” Telkom stated.

These strategic initiatives, combined with technology upgrades and infrastructure improvements at key locations, led to Telkom spending only R23 million on diesel during the quarter—a sharp 84.6% decrease from the R151 million spent during the same period last year.

This focus on cost efficiency drove Openserve’s EBITDA growth by 16.8% to R1.02 billion, with a notable EBITDA margin growth of 5.5 percentage points year-on-year.

Impact of Load-Shedding Suspension

Telkom’s positive results have been bolstered by the unexpected suspension of load-shedding since 26 March 2024. Eskom’s efforts to increase its energy availability factor (EAF) through its generation recovery plan, coupled with reduced demand from solar rooftop generation, have kept the power cuts at bay.

However, former Reserve Bank deputy governor Kuben Naidoo has cautioned that the return of load-shedding remains a possibility if South Africa’s mining sector ramps up production.

“My personal view is that half of the reason we don’t have load shedding is because the mining sector is in a deep recession,” Naidoo explained. He warned that increased production in the mining industry could reignite the energy crisis, leading to the return of load-shedding.

For now, Telkom continues to benefit from the stable energy environment, but the future remains uncertain as the economic and energy landscapes evolve.