Group Ebitda rises 10% as data revenue expands, while BCX remains under pressure despite margin improvement.
A general view of a Telkom store in Cape Town on 16 January 2020. Picture: Gallo Images/Misha Jordaan
South African telecommunications operator Telkom SA reported a 10.0% increase in group Ebitda (earnings before interest, tax, depreciation and amortisation) to R3.079 billion for the first quarter ended 30 June 2026 (Q1 FY2027), driven by sustained demand for mobile and fibre data services and tighter expense management.
In a trading update released on 3 August, the group confirmed that total group revenue rose 2.6% year-on-year to R11.096 billion. Group data revenue climbed 8.8% to R6.922 billion, expanding its contribution to total group top-line revenue to 62.4%, up from 58.8% in the comparative prior period.
The surge in data-led revenue, gaining R561 million across mobile and fibre-related streams, offset a R124 million contraction in traditional fixed-line revenue.
Group Ebitda margin expanded by 1.8 percentage points to 27.7%. Overall operating expenses declined 1.9% for the quarter, supported by reduced mobile roaming fees, lower maintenance expenses, and a drop in the impairment of receivables.
Reflecting on the quarterly performance, Telkom Group CEO Serame Taukobong stated: “We commenced the new financial year with strong data-led growth supported by Mobile and Openserve. Mobile and Openserve delivered solid revenue and Ebitda growth, as mobile service revenue re-accelerated compared to the preceding quarter (Q4 FY2026).”
“We continued with our OneTelkom approach. Furthermore, our cost discipline initiatives contributed to a solid group Ebitda growth and the Ebitda margin expanded. BCX continued to experience revenue pressure, mainly as a result of revenue decrease in Converged Communications as well as IT hardware and software sale. As expected, subdued performance in BCX remains, while the new management continues the reshaping of the business.”
Mobile acceleration and prepaid demand
The Telkom Consumer division registered a 5.3% revenue increase to R7.323 billion, underpinned by mobile service revenue growth of 6.4% to R5.731 billion.
- Prepaid momentum: Prepaid service revenue grew 9.1% to R3.970 billion, driven by AI-driven customer value management platforms (Mo’Nice and Mo’Town), which generated 54.6% of prepaid service revenue. The prepaid subscriber base reached 22.3 million (up 7.1%) with average revenue per user (ARPU) holding flat at R59.
- Subscriber scale: Total active mobile subscribers increased 6.1% to 25.3 million. Mobile data subscribers rose 15.5% to 19.8 million, now comprising 78.4% of the entire mobile customer base. Mobile data traffic expanded 19.6% to 574 petabytes.
- Fintech & value-add: Beyond-connectivity services contributed R425 million in revenue, led by the Airtime Advance lending product, which logged 4.4 million active users during the quarter and represented 24.7% of total prepaid recharges.
Mobile Ebitda grew 17.6% to R1.920 billion, lifting the margin by 2.7 percentage points to 29.1%.
Openserve infrastructure and ISP launch
Telkom’s wholesale infrastructure division, Openserve, recorded a 5.6% increase in overall revenue to R3.320 billion, with external revenue surging 18.2% to R1.475 billion.
Fibre-related data revenue accounted for 89.2% of Openserve’s total operating revenue.
Openserve expanded its operational footprint to 1 565 750 homes passed (up 10.7%) and 843 563 homes connected (up 16.6%), raising its industry-leading fibre connectivity rate to 53.9%. Openserve Ebitda grew 6.7% to R1.101 billion, yielding an expanded Ebitda margin of 33.2%.
In July 2026, Openserve launched its own dedicated Internet Service Provider (ISP) entity to accelerate fibre adoption and enhance network capacity utilisation while maintaining its open-access wholesale mandate.
Weather-related operational disruptions in the Eastern and Western Cape during the quarter required network restoration efforts; however, Openserve maintained network availability metrics of 99.94% for broadband, 99.92% for the aggregation network, and 99.99% across the core network.
BCX restructuring and IT hardware contraction
Enterprise ICT arm BCX continued to face top-line strain, with revenue contracting 10.9% to R2.594 billion.
While core IT services revenue remained flat at R1.048 billion (+0.3%), total IT business revenue dropped 10.7% due to a 30.1% decline in IT hardware and software sales.
Management noted that hardware delivery and procurement decisions were impacted by geopolitical conflicts affecting global supply chains and input costs.
Converged communications revenue fell 11.1% to R1.084 billion, impacted by migration to fibre, pricing pressures, contract losses, and the transfer of a major government contract to Openserve. On a product level, Cybersecurity revenue grew 36.6% and Cloud Services grew 11.8%.
Despite top-line declines, BCX Ebitda grew 2.6% to R194 million, expanding its margin by 1.0 percentage point to 7.5%, supported by an 8.1% reduction in operating expenditure and improved debt collections.
Capital expenditure and property realisations
Group capital expenditure for Q1 FY2027 fell 19.4% to R888 million, reducing capex intensity to 8.0% compared to 10.2% in Q1 FY2026. Management attributed the lower spend to project timing differences in Openserve following elevated completions in the prior year.
Mobile capex totaled R421 million (adding 84 base station sites to reach a total network of 8 504), while Openserve deployed R379 million in capital. Telkom expects full-year capex intensity to normalise within its targeted guidance range of 12% to 15%.
During the quarter, the group finalised the sale of 100 non-core properties generating R200 million in proceeds, with an additional 105 properties valued at R264 million currently in conveyancing.
This article was republished from Moneyweb. Read the original here.
