Telkom SA SOC Ltd (TKG) Earnings Call Transcript & Summary

Good day, ladies and gentlemen and welcome to the Telkom Limited Q3 FY 2024 Trading Update Conference Call. [Operator Instructions]. Please note that this event is being recorded. I will now hand over to the Group CEO, Serame Taukobong. Please go ahead.

Thank you, Chris. Good afternoon, everyone. Welcome to our call for the Q3 F '24 trading update. On the call with me is our new Group CFO, Madam Nonkululeko Dlamini; and the Investor Relations team as well as the CFO community from our business units. Earlier today, we published our Q3 F '24 trading update. I will touch on the key aspects of it under the assumption that you went through it, starting with the business performance. Nonkululeko will then give an update on revenue and EBITDA performance at group and BU level for the quarter. After Nonkululeko update, I will come back and talk to the progress we've made on the Swiftnet proposal -- disposal -- proposed disposal, touch on the regulatory environment, as well as legal updates. We will then conduct a Q&A session. We made good progress in the third quarter on the journey of positioning Telkom as a leading infrastructure company at the heart of South Africa's digital future. Group performance was pleasing against a strong comparative quarter and Telkom managed to grow the top line as the compelling value proposition drove NGN revenue growth, affirming our data-led strategy. The continued uptake of our NGN products by retail and enterprise customer grew both active mobile and fixed subscribers. This, along with double-digit increases in data consumption bode well for the group and NGN revenue grew by 5.1%, an increase of ZAR 440 million, offsetting traditional revenue declines. Our cost reduction initiatives continued to improved EBITDA operating -- to improve operating EBITDA as they partially offset the impact of inflationary increases, higher rate debt positions and the added cost of load shedding. Overall, group EBITDA was stable despite the impact of continuing inflationary pressures on retail consumers and enterprises against the backdrop of muted economic growth in the country. Our relentless work in mitigating the risk and impact of load shedding on our operations and capital expenditure investments made in alternative sources to improve our mobile and fiber networks' resilience yielded results with the mobile network availability improving from 89% to 94%. Regarding the proposed disposal of Swiftnet, substantial progress has been made in meeting the remaining agreed milestones under the exclusivity agreement entered to in late 2024. I will now take you through the performance of our business units. Let's start with Telkom Consumer. Telkom Consumer growth led by mobile data group. Telkom Consumer expanded revenue with the upswing predominantly ascribed to the performance of the mobile business and the strategic expansion of our fiber services. The fiber subscriber base in Consumer grew 12.2%, whereas the traditional copper-based voice revenues continue to decline and that contribution now to total operating revenue reduced to 3.5%. Mobile revenue increased mid-single digits, stemming primarily from the commitment to be innovative and compelling value propositions. Significantly contributing to this growth was a 7.1% uptick in mobile service revenue. Notably, consumers exhibited an inclination towards seeking value through Mo'Nice, our exclusive prepaid pricing platform, which contributed 43.7% of recharge revenue. The mobile expansion emanated predominantly from the augmentation of our customer base, registering an upswing of 6.4% to 19.7 million with a blended ARPU of ZAR 86. Our prepaid base grew by 7.5%, reaching 16.8 million subscribers at an ARPU of ZAR 66. The postpaid base customer was relatively flat at 2.9 million subscribers, recording an ARPU of ZAR 182, with this ARPU holding around this mark for the past 3 quarters. Mobile data traffic increased by 19.7%, totaling 370 petabytes. This growth was further reinforced by a 10.9% rise in mobile broadband subscribers, now totaling 12.7 million and constituting 64.6% of the total mobile subscriber base. Consequently, mobile data revenue grew robustly registering a growth of 11.5%. Nonconnectivity services revenue expanded by 20% to reach ZAR 360 million and central to this growth is our airtime advance product, which now stands at approximately ZAR 1 billion -- ZAR 1.1 billion, constituting 32% of our overall recharges. Let's touch on Openserve. Fixed data next generating revenue increased by 6.2%, underpinned by growth in enterprise services, broadband services and carrier services which increased 12.5%, 10% and 1.7%, respectively. The NGN portfolio contributed 72.5% of total revenue for the 9 months through December 2023 which contributed 77% for the quarter. Openserve's overall revenue, however, continued to decline low single digits, as growth in NGN services persists to be offset by the accelerated decline in total fixed voice revenue. As demand for connectivity and consumption increased, fixed data traffic grew by 24.4% to 612 petabytes. In line with the strategic imperative of creating a pervasive network, Openserve increases access network, which saw the number of homes passed increase by 16% to 1.2 million homes. Furthermore, the drive to provide fiber connectivity to all South Africans, coupled with executing on its connect-led strategy resulted in a 20.8% increase in the number of homes connected to 567,350 while maintaining a market-leading connectivity rate of 47.9%. While SDL (sic) [ xDSL ] services decreased to approximately 82,000 house -- 82,000 lines, the focused execution in modernizing the network through fiber deployment resulted in the overall broadband growth of 6.6% to over 670,000 connections. Openserve continued to diversify its energy mix with the expansion in battery distribution and increase in number of solar deployments and an improved diesel delivery model, resulting in a decrease of 41.7% in diesel spend with the reduced load -- with the reduced load shedding supporting this decline. The energy mix efforts resulted in a continued availability of the core network at 99.99%. Touching on BCX. BCX maintains top line amid challenging trading environment. BCX's revenue declined marginally with the majority of the converged communications decline offset by growth in IT as we continue to drive growth in this portfolio. The IT revenue grew low teens and continues to be driven by the overperformance of the software and hardware businesses, supported by the improved order fulfillment due to the increase of the global -- due to the easing of the global chipset shortage. While the low-margin hardware and software businesses sustained revenue, it is done to strategically allow BCX to gain access to a wider client base and facilitate expansion into high-margin IT services in order to improve the product mix. The IT business also benefit from the strengthened cloud offerings and solutions due to the acquisition of DotCom. The decline in traditional fixed voice, data due to the ongoing migrations to next generation products and churn of subscriptions persist to impact the Converged Communications business. Data Connectivity revenue in this business has reached an inflection point with 78.2% of revenue comprising next generation. Coming on to Swiftnet. The Swiftnet build program remains steadily on track with additional towers and IBS sites constructed in the quarter, with revenue growing mid-single digits. The build pace increased in view of demand that materialized during the quarter. Revenue from growing customers grew mid-teens, underpinned by escalations, new tenancies, 5G expansion and antenna upgrades, reflecting customer-centric focus on network improvement and modernization. The first rollout of Power-as-a-Service was initiated with sites expected to be completed and operational before the end of the current financial year. Nonkululeko will now take you through group revenue and EBITDA performance for the quarter.

Thank you, Serame. And we will now look at revenue and EBITDA performance for the quarter in depth. If we start with the group numbers, revenue increased 2% to ZAR 11.3 billion, largely driven by the compelling data connectivity proposition from our mobile and fixed network supported by Swiftnet commercialization of the masts & towers portfolio. EBITDA was stable at ZAR 2.5 billion, supported by revenue growth and cost reductions from the organizational restructuring. The resulting EBITDA margin of 21.9% decrease, largely affected by product mix at BCX, higher expected credit losses on trade receivables, as retail and enterprise customers remained under pressure from the weak economic environment, together with the load shedding related costs. While load shedding days reduced to 63 days from 89 days year-on-year, the cost of load shedding remains in the operating cost base that we are carrying through. If I just go into some detail in terms of the revenue performance at -- per business unit and I will start with Telkom Consumer business, which recorded a 2.5% expansion in revenue, reaching ZAR 6.9 billion. Mobile revenue increased 4.8% to ZAR 6 billion and the significant contributor was the mobile service revenue, which experienced a 7.1% growth to ZAR 4.9 billion. Mobile data revenue grew robustly, registering a growth of 11.5% to ZAR 3.7 billion. Openserve's fixed data next generation revenue increased by 6.2% for the quarter. This was underpinned by growth across all segments in enterprise services, which increased up to 12.5%, broadband up 10% and carrier services up 1.7%. However, the impact of traditional revenue declines, with total fixed cost revenue of 25.4% decline negatively impacted on the overall revenue, resulting in a decline of 3.1% to ZAR 3.1 billion in the Openserve business. If I move on to BCX, the revenue declined marginally, as Serame has indicated, by 0.7% to ZAR 3.5 billion. The IT business grew revenue by 15.1% to ZAR 2.1 billion, largely driven by the continued overperformance of the software and hardware business that saw a growth of 34.2%. However, the Converged Communications revenue declined by 16.4% to ZAR 1.4 billion. Total Swiftnet's revenue -- total Swiftnet revenue increased by 4.7% to ZAR 333 million with revenue from continuing customers growing by 16.3% to a total of ZAR 257 million. If I just give you some details on EBITDA performance for per business units as well, starting with Telkom Consumer EBITDA, it increased by 20.6% to ZAR 983 million and this was driven by the revenue expansion and the judicious commitment of cost containment that we were driving in the business. EBITDA margin also improved to 14.3% for the quarter. Mobile EBITDA grew 3.5% to ZAR 1.2 billion despite the increased provisions for bad debt, reflecting the ongoing financial challenges faced by our customers and the other impacts on profitability caused by load shedding costs, which amounted to about ZAR 115 million that we had to spend. Openserve EBITDA increased by 7% to ZAR 1 billion on the back of operational improvements, coupled with the benefits derived from other cost efficiencies initiatives such as the head count and the exchange portfolio optimization and this resulted in an increase of 3.1 percentage points in the EBITDA margin to 32.5%. BCX EBITDA declined by 27% to ZAR 322 million due to the impact of the higher revenue growth from the low margin hardware and software business. The converged business legacy declines, as well as the higher impairments on receivables due to the slow collections that we experienced, particularly in relation to our public sector customers. The decline in EBITDA was partially offset by the cost reduction emanating from the staff restructuring initiative and other cost containment efforts within BCX. EBITDA margin contracted by 3.4 percentage points, resulting in a margin of 9.2%. The Swiftnet EBITDA increased by 11.3% to ZAR 246 million, resulting from the optimization of operating costs. The business continued to operate at a strong EBITDA margin of 73.9%, a 4.4 percentage point improvement. I'll now hand back to Serame to cover the renewal of the Swiftnet cautionary as well as an update on our regulatory and legal matters.

Thank you kindly, Nonkululeko. I think since the last -- since the update, we continue to make very positive and substantial progress in line of this transaction, meeting the remaining agreed milestones under the exclusivity agreement, including that the parties have made very solid progress in the negotiations to agree transaction agreements. I would kindly remind you all that the transaction is classified as a Category 1 transaction and is subject to shareholder and regulatory approval. Telkom expects to be able to make a more detailed announcement on or before it's required to update this cautionary announcement as is required by the JSE listing requirements. The conclusion of this proposed disposal will be a key milestone for us in excluding -- in executing and demonstrating Telkom's value unlock strategy of disposing noncore assets, while we retain access to and the use of this infrastructure. On the regulatory front, ICASA published the results of the cost modeling exercise for comments on the 12th of December 2023 in relation to call termination rates. They are currently reviewing the comments they have received, including comments we submitted and draft regulations on mobile and fixed call termination rates are expected to be published by the 15th of March 2024. In relation to spectrum, we paid the final auction fee of ZAR 972 million in December 2023 for the sub 1 GHz spectrum we acquired in March 2022 auction process. This spectrum has subsequently become available nationally and we have already deployed it. The regulators are in the process of licensing additional high-demand spectrum and aims to conclude it by the end of March 2024. The consultations for the license in this spectrum have not fully commenced, making it unlikely that ICASA will complete the licensing process by the indicated date. We submitted a comprehensive response for the Electronic Communication Amendment Bill and engagements with the Minister and all other parties are ongoing. In regards to the SIU matter, following the Pretoria High Court's declaration, the presidential proclamation to investigate Telkom regarding certain matters unconstitutional, the High Court granted both the President and the SIU leave to appeal to the Supreme Court of Appeal and the matter is currently pending before the Supreme Court. This concludes the call and I now hand over to the operator for Q&A.

[Operator Instructions] Our first question is from Preshendran Odayar of Nedbank.

Congratulations on the results. I've got 3 questions to start off with. Sorry, Nonkululeko I'm going to start with a few financial ones. First one is, I know you guys don't disclose your free cash flow at this quarterly trading update. But can you give us an indication of how this is tracking given that your CapEx in this quarter was quite low? And I mean, was that driven by the fact that free cash flow might be under pressure? And what are you expecting for the end of the year? Secondly, to the new CFO, what is your top 3 or top 5 priorities you're going to action as CFO of Telkom Group? And then obviously, one for Serame because I can't leave him out. On this renewed cautionary, can you give us just a little bit more color on what is taking so long on this deal? I mean, is it valuation? Is it cost? It's just -- I mean no offense but it sounds like you're the bride that always -- like you always go to the wedding but you never actually get married, like runaway bride. So just wanted to see if I can push you for a little bit more color on why there's still a delay on the Swiftnet transaction.

The next set of questions come from Jonathan Kennedy-Good of Prescient Securities.

Just a couple on the mobile business and the margin seemed to be flat. I mean I know you pointed out credit losses but I would have thought if with substantial load shedding reduction on their own would mean lower diesel costs and potentially lower roaming costs as well, which I would have thought would have led to a rebound in margin there. So just wondering whether you can give us some color and some split on that -- how much of that's provision for bad debts is and whether you see it deteriorating further? And then furthermore, on the 800 MHz spectrum, as you've deployed that, what do you see in terms of network headroom and impact on CapEx, OpEx going into the new financial year?

The third set of questions is from Nadim Mohamed of SBG Securities.

Well done on an excellent set of results, especially in mobile. Just 2 questions from my side. In the report, you mentioned that mobile was driven by higher recharges and price increases in prepaid. So want to get a sense on, have you been able to push through material price increases? Is this sort of the direction of the industry right now? And what sort of quantum are we looking at because we do see ARPU holding up quite well. And then secondly, just in terms of BCX, we think BCX could be a significant leverage point in terms of creating value for shareholders by turning that part of the business around. So I'd like to get an update in terms of how to think about, firstly, within IT moving into those higher value areas like cloud, how far are we -- how far are we from getting to material contribution from those areas? And secondly, on the converged comms business, what's your plan to fix that? Or what's the sort of latest status on how that turns out?

Okay. We'll start with first your free cash flow question. Yes, I knew you were trying to tackle Nonkululeko, so I'm here to protect her. Generally, we don't share a lot on free cash flow, you did talk about the CapEx generally being lower. I think we steered the CapEx generally in the same range that we've been giving the guidance on. I think if you look at, yes, we are coming in lower than the higher level of guidance. I think we'll most probably land at the same low of 14% here. It's not necessary that we're choking the CapEx to release the free cash flow, it's because the spend is really smarter, particularly in mobile, what the guys have been doing, like we've always explained, they have now got 2 roaming partners in both Vodacom and MTN. So they build the CapEx exactly where it is more effective or cost effective for them to manage their running costs. So I think that is driving the affordability. But naturally, you would see in terms of the quarter, we've indicated that we did have to make the payment for spectrum. So you would have taken a bit of a knock in the payments done for December. We generally don't forecast but we are still holding on to our steer that it will be negative for the year-end but certainly not to the levels where we closed the year last year. I don't know if Nonkululeko, you want to be brave enough to give a steer following that.

No, absolutely, thank you, Serame. So I think you've covered the free cash flow question quite adequately, so I'll not repeat your words. And we are -- the focus is to invest CapEx smartly and manage within the envelope of the financial framework that we are trying to drive. But also, first, you asked a question about my thinking and priorities as I start at Telkom. And I think it's quite a good period for me to start because the business has shared the focus on the strategic direction and mine is to ensure that from the financial stewardship, we support the business with regards to the value and [ loan ] transactions and swiftness is obviously one that the market has been asking about. And also the strategy of One Telkom in relation to the direction going forward, which will be very critical for me and the finance team to drive and ensure that we support the business with financial rearview mirror, with regard to where the strategy is taking us and certainly working with the business in that regard.

Presh, your other question. You called us a runaway bride, no offense taken. The process does seem to -- if you look at the complexities involved in that, as we said in the last update, things like due diligence and those key material matters have been crossed. So those elements have been done, which was the update we gave, it's now getting to the crossing of the t's and the dotting of the i's. Now this kind of tower sale in terms of -- and let me use your proverbial example of the bride. It is not unfortunately very simple bride because, the father as such, it happens to be not just a simple landowner but someone like the king of a country. And with that in there are all sorts of entities and rights and all those other very complicated legalities that pertain to what dowries are due to this bride. So I'm trying in very complicated English to remain within my constraints of the JSE to outline how complicated this process is but we are extremely confident that a lot of these processes are now coming to a closure. Presh, I hope I've answered you in a very positive manner. We'll jump to then Jonathan. Jonathan, I think in terms of your question of mobile running margin flat, I have our good colleague, Hasnain, on the call here. Hasnain, would you like to take a stab at Jonathan there.

Of course, we noted on the margin expansion for mobile it's -- but also firstly, maybe bear in mind that quarter 4 is for us a seasonal high activity quarter for us, where we invest quite a bit in the market during that particular period. And also more to the point you alluded earlier on the ECL provisions. We've taken a far more conservative approach in terms of pushing through the provision on ECL because we're seeing the consumers to have this great solution. So we should just use the word ECL, expected credit loss. We expect these losses to continue at the levels that have been set post-COVID. It's not abating yet. And we're not [indiscernible] we're seeing across the banking sector, as well as the clothing retailers. But even taking that into account, the EBITDA was sort of flat in the year. So we are okay where we land it from a EBITDA perspective but the point to be noted that expansion -- the margin expansion has to start opening up again. We think we beat the highest [indiscernible] provision and we should not see a leveling of that ECL provision. But bear in mind, if you look at our prepaid business, given what we saw on our postpaid, our prepaid business grew quite nicely and we focus on over indexing on that during the current fiscal year. In addition, we have also made the access to postpaid contracts more stringent in the business. So we slowed it down, taking a view around in terms of ECL going forward on the price. And so we should see a normalizing of that from the current highs, its elevated in terms of percentage of total revenue, back towards normal and that will contribute towards margin expansion into the new year -- over the years. But it seems tougher in the -- among our postpaid consumer. We're not taking that -- the duration of that consumers very likely. In terms of MHz spectrum, maybe just to add on that one. So if you can recollect when we had [indiscernible] spectrum in 2021, '22, that -- there was issue by ICASA, that spectrum to a large extent deployed in sub 1 GHz. So when we got the 800 MHz though the auction, we were able to convert that 800 MHz spectrum to the older spectrum. So we are quite far down -- far out in terms of spectrum deployment from the sub 1 GHz. We have had over 3,500 sites deployed already. We will continue to deploy, as you noticed earlier, we noted earlier the CapEx deployed was limited this year but we're looking to expand it going forward but within the reasonable ratios we've set ourselves from a payback perspective. So we're quite far down in terms of 800 MHz deployment and it contributes significantly towards the [indiscernible] implementation or the cost implementations you're seeing for the last 2, 3 years. So that covers the 2 mobile questions.

Perfect. I think you had one more question, which was from Nadim, in regards to your price increases.

So that's -- it's not price increases. We did have subsidized price increases beginning of the year on postpaid but not mostly subsidizes on prepaid. We continue to drive value on the prepaid side using the Cvm, [indiscernible], in terms of Mo'Nice and that's kicked up often slightly flat, I think 6 quarters and we're quite comfortable that it's blended and even the 3, are quite nicely So even though the process is under the way, the [indiscernible] nicely without pushing through significant price increases on prepaid. We don't expect to actually do above CPI going forward but they will be obviously given where we are from an inflation and cost push through, they will be some adjustment, therefore, on that significantly. So the ARPU is not [indiscernible] is to answer your question.

Excellent. And I think to close on Nadim's question, absolutely, you're right in terms of BCX. I think the solution really around the converged comms is a two-pronged approach. You are right, the big focus is really on to driving the higher value, higher margin focus on cloud, thus the -- complementing the firepower on BCX with the purchase of Dotcom, which is happening -- helping us to play them into that cloud service. So the bigger focus there is in cloud, fiber, IoT, playing in the space of [ Alibaba ], then start to get us into the cloud. If the double [indiscernible] was, yes, even though your hardware is low margin, it does give you a foot in the door where you can then layer on your IT services and solutions and play a bigger role in the cloud service to offset the decline in your converged comms. So that is what we are doing in the BCX space. I hope then that covers you, Presh, Jonathan and Nadim.

[Operator Instructions]. Our next questions are from Nomandla Duma of PSG Asset Management.

Just a follow-up question on the free cash flow tracking well. Just wanted to ask a question. Can you just please clarify, Serame, on the sub 1 GHz spectrum. What are the 2 close deployments for just the CapEx number? Do we stay at the 14% guided number or do we go back? I just wanted to ask that question. And then I guess, some clarity also on just the Swiftnet deal, which, yes, I'm trying to understand the father of the bride. I just wanted to understand that in the process is the regulator also involved as part of the negotiations, also just not what the 2 parties that are involved in the transaction but also just also negotiating or rather ensuring that the transaction does potentially go through if the 2 parties agree with the regulator. Did you refer -- were you referring to the regulator when you were referring to the father? Or are you referring to Telkom themselves, the Board also?

So we have no further questions in the queue at the moment.

So Nomandla, on the sub 1 GHz. So as Hasnain highlighted, a lot of the CapEx for the sub 1 GHz was already spent when we bought the allocation around for this. What was outstanding Nomandla is, there were some areas where the sub 1 GHz was not available due to interference in smaller patches because of the late migration from the radio stations. So that migration has happened and that is why the late payment then happened. So most of the expenditure has been done for the payment of the license but the rollout on CapEx was just literally switching on the antennas with them. So the -- you won't to see a significant improvement in terms of that band. It will remain in that 14% range in that regard. In terms of the complicated bride, there's the process of the engagement with the parties to purchase and sign the agreement. Post this, it then goes to the normal processes of going to the regulator being ICASA and the South Africa competition commission. In terms of the process, we don't foresee any significant blocks in that regard from competition, no regulator. We also do have from our primary shareholder support for this transaction. So those things we are quite comfortable with. What we can't go into details and further and as much as we would want to and I'm sure you want to hear, is you find the details of the commercials, who the partner is, who the transaction partners is, what the value is because those are elements, obviously, we can't go into greater detail due to the JSE commitments.

The next questions are from Myuran Rajaratnam.

A question on the mobile service revenue growth. I mean, you definitely seem to be growing faster than some of your peers who have reported thus far. Now you said it's Cvm related and not so much pricing on the prepaid side. But how much was the metric, availability benefit? Is there any way to break it out because you went up from what you said 89% to 94%. That must help clearly with the sales revenue growth as well.

Thank you. No other questions in the queue at the moment, sir.

Yes. I think definitely, the availability does play a role. It will be twofold. It would play a role in helping us with our roaming for one. Two, it will obviously play a role, especially when in this particular quarter because typically, what happens is, customers would say, if I go to my village, Telkom is not available, so I flipped to another. And now when I go there and sure, Telkom is available, obviously and your customers stay on for longer. And what the guys have been doing, I mean, Cvm, please do not underplay that. It's been a massive engine that Hasnain's team in consumer has deployed because what we've been looking at Myuran, is active base management. So the guys have been very, very harsh on, almost -- and I think I used to sing this song in my old days in mobile, is looking at your 7-day active users because those are the guys who really drive your proper usage. So let me not be accused of always of wearing a mobile hat, Hasnain, let me rather let you sing your own praises, so that are not accused of being a mobile-friendly person and we wear my comm hat.

No, we appreciate your [indiscernible] disposition certainly. Maybe just one more to add to that Myuran is that also we've got the [indiscernible] time line is also kind of strong in the last quarter. But we're careful not to outline, I know some of our competitors are pushing higher percentages of prepaid revenue into that space. But we've actually grown that business quite significantly in terms of absolute numbers over the years. And we have a strong network [indiscernible]. So together with Cvm active base management and [indiscernible] and also working closely with our dealer community, it's a confluence of many things. There isn't one. [indiscernible]. I'd like to say there is [indiscernible] that makes business much more easier but it's not -- it's hard work getting the basics right across the board. Specifically in prepaid because the prepaid is very much dependent on your footprint out there from a dealer fraternity and our Cvm [indiscernible] and how you're able to affect consumer loans later -- when there isn't money in the wallet to actually purchase airtime. So those kind of things we see that in mix slowly but surely but it's very much a -- I don't want to say, it's [indiscernible] it goes to make up the prepaid. And like I said, we're also slowed down by measures through higher interest levels for postpaid, just index on the prepaid. So that's helped us through this. And you can see the difference in the consumer there. And thus, this actually plays to our strong acceptance -- a strong answer to speak [indiscernible]. And we hope to continue. I mean it's not -- you're basically trading day in and day out on every single active customer in terms of usage, the way they actually recharge, when they recharge, when there's cash in their wallets, when they recharge -- it's basically doing basic stuff. So Serame was right to remind this, kind of don't do the stuff that requires time and bigger stuff, while that does require time and this is what we see. Yes, I think we've covered everything.

Then we do have a follow-up question from Nomandla Duma of PSG Asset Management.

Cool. Sorry, guys. Just wanted to check, Serame. Can you just give us a sense on the total load shedding cost to the group in this quarter? Just want to get a sense of whether the cost implications from load shedding are actually getting better? Or are they still tracking the same at a run rate that is similar to the last one, I guess. And then the second question would be update on the working capital release program that you guys had just on the handset financing and all. Is that on track? Yes, yes.

Thank you, Nomandla. If I can just give you a bit of a flair on the cost of load shedding and we've broken it up to the 2 parts of the business that are largely affected by load shedding. So in the consumer space, we spent a total of about ZAR 115 million to deal with load shedding related methods. And then in Openserve, we spent about ZAR 89 million and the total is just over ZAR 200 million that we've been managing to improve the impact of load shedding in the business.

And then the second question was the capital -- the devices rental, commercial [indiscernible]? Hasnain, your capital -- your working capital question, I think Hasnain, do you have left in your kitty, it in terms of your devices, you have working capital projects?

So it came about ZAR 250 million, ZAR 270 million in quarter 3, that's in the quarter under review here. We're looking to do a similar amount in quarter 4. Since we can't pretty much BAU it, we will release the rights debtor books to the bank and so we've not yet. And obviously, price [indiscernible] but it's now becoming BAU, it's a standard operating procedure. But like I said earlier, we're also going to moderate the inflow to ensure that we get a good quality of books. So when you sell a bank, bank doesn't feel that we're selling a duress customer. So it's a bit of a, managed conservatively so that when we hand the book over to the bank, the bank is not necessarily shortchanged by the quality of book we gave them. So it's now become BAU to a large extent. We probably need to do ZAR 300 million a quarter, if we're in good quarter, maybe up to ZAR 400 million or ZAR 500 million but we should be around ZAR 300 million, ZAR 250 million, ZAR 300 million mark of books.

Nomandla, are you happy with that?

Thanks, guys. Thank you so much.

We do have a follow-up question from Myuran Rajaratnam as well.

Just to follow-up on the roaming side. Is there any part of the country where you've actually decommissioned the network and just give the entire traffic to one of your roaming partners, something like what Cell C does. Question for, Hasnain I think.

Yes, I don't think he would ever totally decommission the Hasnain. So there are instances where he would not build new sites because there's better coverage with competition but there is no areas where you would decommission network because of that. Hasnain?

I don't think as so, because you take a very circumspect process towards deploying it, once you put it down it's basically there for life. So we will not decommission unless the one maybe, Myuran question, I think was really [indiscernible] in certain sites where we increase 4, 5, 6, 7 times. We might take a different approach to it but we will never en masse decommission a network and I actually hand over to our roaming partner because we find that we actually -- we always remain the lowest cost per minute producer and we can provide that value to our customers. The roaming is adjunct and is not a primary input into the -- into providing the service to the customer. So no, we will never do en masse decommission.

We have no further questions in the queue. Would you like to make some closing comments?

Thank you very much for all your questions and thank you kindly for your continued support. Thank you for joining us on this call and thank you for taking interest in Telkom. As always, if you do have any further questions, do forward us to our Investor Relations team and we'll be more than happy to answer them. Do have a wonderful day onwards.

Thank you very much, sir. Ladies and gentlemen, that then concludes today's event and you may now disconnect your lines.