Telkom CEO on H1 earnings & COVID-19 impact on business

Telkom, one of the leading companies enabling connectivity throughout the lockdown in South Africa, has reported a significant increase in headline earnings per share by 25.4% to 219 cents per share for the six months ending in September. Group Earnings Before Interest, Taxes, Depreciation, and Amortization also rose by 6.3%. Telkom CEO, Sipho Maseko, recently sat down with CNBC Africa to discuss the company's H1 earnings, the impact of COVID-19 on their business, and their future growth strategies. Maseko highlighted the company's diversified nature, allowing them to navigate both positive and negative impacts of the pandemic. While connectivity services thrived as individuals continued to work and study from home, other sectors like BCX and small and medium businesses faced challenges. Maseko expressed optimism about the gradual recovery in the economy and mentioned green shoots in BCX's performance. Despite this, Telkom remains cautious and maintains elevated levels of provisions to prepare for any uncertainties. Telkom's success in the mobile space, becoming the third-largest mobile operator in South Africa, has been a significant achievement for the company. They have strategically focused on data as the new frontier, investing in 4G and 4.5G networks to support broadband traffic. Maseko emphasized the importance of data's infinite potential, contrasting it with finite voice services. Telkom has recently launched streaming and ecommerce platforms, recognizing the convergence of digital services with connectivity. Looking ahead, Telkom plans to leverage 4G and 5G technologies to drive new revenue streams, particularly targeting enterprise solutions. Maseko also discussed the importance of spectrum allocation by the regulator, emphasizing the need for fairness and efficiency in the process. He expressed confidence in the regulator's ability to expedite spectrum release, highlighting the positive government actions during the pandemic. Finally, Maseko addressed Telkom's capital expenditure (Capex) projections, stating that they plan to spend between 16 to 20% of revenue on Capex. The focus will be on strategic investments to support growth, particularly in data services. Despite the ongoing challenges posed by the pandemic, Telkom remains committed to driving innovation, expanding their market presence, and delivering value to shareholders.