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Telkom has become SA’s third largest mobile operator

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Telkom has overtaken troubled Cell C following the surge in demand for data services driven by the national lockdown.

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JOHANNESBURG – Telkom has overtaken troubled Cell C to become South Africa’s third-largest mobile operator on the strong growth of its mobile business following the surge in demand for data services driven by the national lockdown.

Partially state-owned Telkom said on Friday its mobile business had sustained its growth trajectory into the first half of the year. It said mobile data, which contributed about 70percent to the mobile business, was the main driver of growth, driven by strong growth in mobile traffic.

“The mobile business continued to gain market share from its peers, both from a customer and revenue perspective, to become the third-largest mobile telecoms in South Africa in a period of 10 years of establishment,” the mobile giant said.

Telkom managed to topple Cell C, which has faced several headwinds and has embarked on a recapitalisation programme to improve the company’s capital structure and to tackle its R9billion debt burden.

Telkom said although the consumer business had benefited from the increased demand from people working from home and online schooling due to Covid-19, BCX and Small Medium Business were negatively impacted by the national lockdown, as corporate customers were under severe financial pressure.

“Migration to work-from-home negatively impacted the enterprise fixed business, as the usage was diverted to mobile connectivity leading to a significant decline in fixed voice revenue,” said Telkom.

Telkom said enterprise customers reduced IT spend in the first half of the year and postponed some of their capital investment projects as a response to the heightened uncertain environment caused by Covid-19.

Overall, group revenue showed resilience in the face of this pandemic.

The group also said it had entered into a payment plan with the SA Revenue Service (Sars) to settle outstanding tax of R870million, signalling an end to the eight-year dispute.

Telkom said that, as part of the plan, the liability was payable until the end of March next year. “This will be funded out of our monthly cash flows,” said Telkom.

The dispute dates back to the 2012 year tax year and relates to the tax treatment of the loss that arose following the sale of a foreign subsidiary, Multi-links Telecommunication.

Sars disallowed the said deduction and issued an additional assessment. Telkom had made various US dollar-denominated loans to Multi-links to help the struggling company survive until it was sold to Hip Oils Topco in 2011, an unrelated third party.

Telkom shares closed 1.5percent lower at R25 on the JSE on Friday.

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