Picture: THE TIMES
Picture: THE TIMES

TELKOM said on Monday that its mobile unit would not reach its break-even target next month owing to cost pressures and its operating environment.

The country’s fourth mobile network operator grew subscribers 22% to 2.56-million during the three months to December. Data revenue rose 56% year on year to R417m at the end of December.

"Our initial expectation that the mobile business would break even by March 2016 has been tempered by the operating environment and cost pressures. We are, however, confident that we will maintain the current positive revenue growth witnessed in this part of our business," Telkom said.

Telkom’s total revenue for the three months ending December rose to R7.2bn representing year-on-year growth of 7%. Fixed-line voice revenue was down 5% year on year to R3.6bn.

Telkom said the economic and operating environment had deteriorated, driven by lower commodity prices and a weakening rand.

"The outlook remains challenging on the back of lower growth expectations, higher interest rates and rising inflation," the company said.

Telkom has been spending billions of rand on the fibre-optic cable network and long-term evolution (LTE) wireless network to enable its subscribers faster internet speeds.

It has more than 56,000 homes connected to its fibre-to-the-home network.