Telkom has once again proven itself to be a model state-owned enterprise (SOE). With many of its public-sector peers on the brink — most notably debt-laded Eskom — Telkom’s financial results for the year to end-March show the benefits of private-sector participation and of competition.
The group said on Monday it made a profit after tax of R3.3bn in the year, an 11.5% increase. Service revenue from its mobile business, which is fast taking market share from the incumbents thanks in part to competitive pricing, surged 58.3% thanks to 85.9% growth in active subscribers, to 9.7-million customers.
Telkom is hardly an SOE these days — the government only owns about 40% of the network operator, which operates independently of the state and is answerable mainly to private shareholders. And unlike many other SOEs, which can be complacent as they have no real competition, it has to take on formidable competitors and is therefore forced to stay on its toes.
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This presents a compelling case for the state to open up SA’s national electricity grid to private investors, for instance. And when other SOEs such as Eskom and SAA are on their feet, selling majority stakes to the private sector could make sense.
Meanwhile, Telkom also revealed that it owns 1,970ha of land, including a 844ha vacant plot at Klipheuwel and another 439ha plot at Hartebeeshoek. With the ruling party moving towards the expropriation of property without compensation, and considering that it is eyeing state-owned land in particular, Telkom may be concerned that its real estate could be in the firing line.
Gold Fields prudently manages its debt
Gold Fields is coming to an end of its big capital expenditures in Australia and Ghana and it has turned its attention to tidying up and pushing out big debt repayments.
Gold Fields told the market earlier in May that it had secured two bond instruments worth $500m each, with a five-year and a 10-year term respectively.
Coupled with its growth plans, the company is setting itself apart from its peers with its ability to raise the money to repay near-term debt and put longer-term debt on its balance sheet.
On Monday, Gold Fields told the market it had bought back $250m of 2020 bonds. The balance of the 2020 bonds, worth $600m, will be repaid when they fall due in October through a combination of cash and debt, the company said.
Gold Fields wants to bring its net debt down by up to $150m during the course of this year. Net debt stood at $1.6bn at the end of December 2018, up from $1.3bn the year before.
Paul Schmidt, Gold Fields’ CFO, said during the company’s full-year 2018 results presentation that a further $1.2bn of bank debt would also be refinanced.
While at minimal risk of breaching any debt covenants, the company is prudently managing its debt after a busy two years on its projects in Australia and Ghana, lining the group up to deliver two-million ounces of gold a year, and not putting the balance sheet at any risk in a volatile gold market.
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