A group of 21 former Telkom employees have won their case in the labour appeals court in Durban after being unfairly dismissed during the implementation of a labour outsourcing agreement and fighting for eight years to get their jobs back. (Waldo Swiegers/Bloomberg via Getty Images)
Telkom has requested a postponement of the next spectrum auction, citing the harsh economic environment it says will make it difficult for the country’s cell phone operators to participate.
The JSE-listed telecommunications firm made the revelation in its interim results for the six months ended 30 September 2023.
The Independent Communications Authority of South Africa (Icasa) aims to conclude the process of licensing additional high demand spectrum — allowing cell phone and wireless operators to access certain radio frequency bands — by 31 March next year. But Telkom wants this pushed to the 2025 financial year.
Telkom said the postponement would allow Icasa to complete studies ahead of the next auction, while also giving cell phone operators some distance from the current difficult economic environment, including the effect of load-shedding.
Icasa has not yet responded to Telkom’s request.
Telkom chief executive Serame Taukobong said there will be no significant effect on the business if Icasa does not agree to a postponement, noting that what is left of the spectrum auction comes with untenable execution requirements.
“So I think where we are is to try and align the mobile operators to actually benefit from the spectrum that they’ve got right now,” Taukobong said during Tuesday’s results presentation.
“I think, in principle, unless there are changes fundamentally, Telkom will not be participating in the next auction.”
Telkom has flagged various concerns about the Electronic Communications Amendment Bill, which the company says creates uncertainties regarding the continued use of high demand spectrum.
The amendments would allow Icasa to instruct a licensee to share its spectrum where it has failed to adequately use the assigned spectrum for a period of two years. The Bill also states that Icasa must prioritise community networks in assigning unused spectrum.
Despite releasing its results against a tough economic backdrop, Telkom highlighted the group’s solid earnings growth during the period. The group’s basic earnings per share increased 52.1%. Profit after tax from total operations increased by 52.3% to R976 million, from R641 million during the first half of 2023.
But one lowlight of Tuesday’s results was Telkom’s debt, which investors have previously raised red flags over. The group’s net debt increased by 8.2%, from R16.7 billion as of March 2023 to R18.1 billion in September 2023.
During Tuesday’s presentation, Telkom chief financial officer Dirk Reyneke noted that the group had managed to significantly improve its debt maturity profile by moving more than R4 billion from short- and medium-term debt to longer-term debt “at very sound commercial rates”.
Telkom’s share price received a boost this morning after news that the group was close to concluding an outright sale of Swiftnet, its masts and towers business. The sale will put Telkom one step closer towards positioning itself as an infrastructure business at its core.
The Swiftnet sale will release capital that can be used to strengthen Telkom’s balance sheet.
At the time of writing, Telkom’s shares were up 7% compared with this morning.