SENS-AI
TKG Trading Update Bullish

TELKOM SA SOC LIMITED - Trading update for the third quarter ended 31 December 2025

Telkom SA SOC Ltd
Full analysis

What this filing means

Bull case

  • Strong data-led revenue growth with Group data revenue up 9.6% for the quarter, now accounting for 60% of total revenue.
  • Significant EBITDA margin expansion to 29.1%, exceeding the guided range of 25%-27% due to effective cost optimization.
  • Robust subscriber growth in the mobile segment, with data subscribers increasing by 29.3% to 19.3 million.
  • Strong operational performance in Openserve with a 17.8% increase in homes connected and an industry-leading 52.4% connectivity rate.

Bear case

  • BCX segment under significant pressure with revenue declining 9.3% in Q3 due to tough market conditions and reduced enterprise spending.
  • Leadership uncertainty following the retirement of BCX CEO Jonas Bogoshi during a period of segment revenue strain.
  • Capital expenditure intensity is rising (up 19% Y-o-Y) while overall Group revenue growth remains modest at 1.3%.
  • Technical weakness and poor market sentiment, with the stock trading below its 50-day moving average on high volume.
View original SENS announcement

AI-generated summary by SENS-AI, based on the original JSE SENS filing.

SENS-AI conclusion

Telkom's Q3 update reflects a tale of two businesses: a surging mobile and fibre division offsetting a struggling enterprise (BCX) unit. While the 29.1% EBITDA margin is a clear highlight of operational efficiency, the market's focus remains on the 9.3% revenue decline at BCX and the associated leadership transition. Investor Takeaway: At 8x forward earnings, the core connectivity business is performing well, but the stock will remain range-bound until BCX stabilizes and technical momentum improves. Signal-to-Price Note: The price is down 3.12% despite the EBITDA beat, likely because the market is pricing in the structural headwinds and CEO turnover at BCX as a higher risk than the mobile growth reward.

Evidence from the filing

  • Telkom achieved strong data-led revenue growth, with Group data revenue increasing by 9.6% for the quarter and 8.5% year-to-date, now contributing 60.0% to total revenue, indicating successful execution of its core growth strategy.

    “Group data revenue up 9.6% to R6 864 million, increased 8.5% year-to-date contributing 60.0% to total revenue.”

  • The Group demonstrated significant profitability expansion, with EBITDA growing by 8.4% for the quarter, and the EBITDA margin expanding to 29.1%, which is above the upper-end of its 25%-27% guidance, reflecting effective cost optimisation.

    “Group EBITDA grew 8.4% to R3 237 million, with the EBITDA margin expanding to 29.1%, reflecting ongoing cost optimisation.”

  • The company reported robust subscriber growth in key segments, with mobile data subscribers increasing by 29.3% to 19.3 million, and Openserve's homes connected growing by 17.8% to 786,490, maintaining an industry-leading fibre connectivity rate of 52.4%.

    “Mobile data subscribers increased by 29.3% to 19.3 million, due to tailored value-focused plans.”

  • The severe decline in BCX's revenue and EBITDA, coinciding with a CEO retirement, signals significant operational and leadership instability within a key enterprise segment facing 'tough market conditions' and 'cautious enterprise spending'.

    “BCX revenue declined by 9.3% in Q3 FY2026 and by 5.9% year-to-date, reflecting continued tough market conditions and revenue strain in Converged Communications.”

  • Despite a narrative of 'growth-supporting investments', Telkom is deploying increasing capital expenditure (up 19.0% Q-o-Q and 14.5% YTD) for only modest overall Group revenue growth (1.3% Q-o-Q and 2.7% YTD), implying diminishing returns on capital and potential pressure on free cash flow.

    “Capex investment of R4 174 million year-to-date, at an intensity ratio of 12.6%, remained focused on growth-supporting investments. [...] Capex 1 304 [2025] 1 096 [2024] Y-o-Y % change 19.0 % [...] Group revenue 11 134 [2025] 10 995 [2024] Y-o-Y % change 1.3 %”
Category
Trading Update
Published
Feb 16, 2026

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