Telkom reports 51% slump in HY HEPS

South African telecoms operator Telkom has announced its plans for serious cost-cutting in the second half of the year after reporting a 17 percent decline in profits for the first half of the year ending in September. Headline earnings per share took a significant hit, dropping by 51 percent. Serame Taukobong, Telkom Group CEO, spoke with CNBC Africa to shed light on the challenges faced by the company and the strategies being implemented to navigate the current tough operating environment. Taukobong highlighted various economic factors that have impacted the company's performance, including a sluggish economy, increased electricity and fuel prices, rising interest rates, and a constrained consumer base. These factors have put pressure on consumers' pockets, necessitating a focus on making communication more affordable and cost-effective for customers. Telkom is aggressively addressing cost challenges on multiple fronts to improve its competitiveness and enhance value for its clientele. In response to rising diesel costs, the company is implementing new technologies and battery usage to reduce expenses. Additionally, Telkom is offering aggressive pricing in its mobile and fiber propositions to enhance affordability and value for customers. The company managed to increase its prepaid subscriber base by almost 11 percent to 15.2 million by focusing on affordability and value propositions. Telkom aims to maintain its momentum in investment in non-voice services and broadband to drive revenue growth and extract operational efficiencies. A key focus for the company moving forward is cost optimization across all business units to improve cost-to-serve metrics while maintaining service quality and value delivery. Inflation remains a concern for Telkom, impacting various aspects of its operations, including the costs of goods and exchange rate fluctuations. Telkom's capital expenditures (CapEx) will be directed towards reducing roaming costs in the mobile segment and expanding fiber connectivity through Open Serve to increase home broadband penetration. The company aims to surpass a 50% fiber connectivity rate to enhance its broadband infrastructure. Taukobong emphasized the importance of reducing reliance on roaming by building base stations on mobile operators' networks, thereby decreasing roaming expenses. Telkom's strategic focus on cost-cutting and operational efficiency is crucial in navigating the challenging economic landscape and maintaining competitiveness in the telecom sector. The company's proactive approach to addressing cost challenges and enhancing customer value positions it well for sustainable growth and success in the future.