2024. In case I also forget, my name is Serame Taukobong. I'd like to recognize our board led by a chair, colleagues from Exco, shareholders here present, members of the press, colleagues listening and watching on air. I will take you through briefly our highlights, some of our business unit reviews. Nonko will take us briefly through the financial view. I will close then with our outlook and our priorities. Just to reinforce where we were, we did introduce to the market the concept of an InfraCo. I think if you look at where our results are landing, it is starting to show that this strategic focus of being an InfraCo, yielding and sweating the core assets that underpin our data-led strategy, is showing its results. What we have in Telkom are key assets which cannot be replicated.
How we're taking this to market is by ensuring that seamlessly together, these unique assets are driving the thrust of ensuring that we as Telkom lead the drive to digitally connecting South Africa, but more importantly, being at the forefront of driving data connectivity and ensuring that our data revenue growth is sustained throughout. This portfolio is not just limited to our robust infrastructure in fiber, supported by strong mobile connectivity, underpinned by the strength in the IT growth we're seeing out of BCX, and continuous efficiency and drive on ESG supported by our team in Gyro. We continue to invest in connected-driven fiber, making sure that we have a connect-led strategy in OpenServe.
If we look at our mobile growth, having now reached 20 million subscribers, it is ensuring that despite the tough challenges, we are driving the demands and ensuring that we meet demands of a data-hungry consumer. In BCX, mitigating the inflation of converged communication with IT-led growth. In our Gyro ecosystem, driving our ESG focus and also disposal of our properties. Our continuous investment to mitigate against load shedding has yielded results. Availability on our core networks, both in OpenServe in terms of fiber availability, as well as our mobile network, has ensured that load shedding has become a norm in our business in that the investments we did 18 months ago are yielding results, not just in terms of availability, but also ensuring that we are meeting our impact on ESG.
More critically, our investment in mobile network has impacted a reduction in roaming and the resultant reduction in roaming costs. In delivering the promised journey of value unlock, we have successfully managed to get shareholder approval for the disposal of SwiftNet. We have communicated the desired impact for this disposal. We are now in the last throes of this journey, with approval being applied for disposal of this with ICASA and the Competition Commission. This process is ongoing, and we will update the market accordingly. The net impact of this is reflected in the results. We have seen positive top-line revenue growth. We have seen NGN revenue driving this top-line growth. We have seen solid performance in EBITDA. As I've mentioned, our mobile business is strongly entrenching subscribers, reaching and surpassing the 20 million subscriber growth.
Strong performance in headline earnings per share, free cash flow, solid recovery from the negative position that we were in last year, and a continuous focus on reducing our net debt to EBITDA position. I will give a brief overview of our operational performance. The framework in which we were looking at our various operations was really on growing revenue, ensuring that we improve profitability, driving operational excellence, and disciplined CapEx allocation. Let's take a brief view at each of the business units in summary. Starting with Telkom Consumer. As I mentioned, solid performance in subscriber revenue. Service revenue growing ahead of market trends at 6.8%. Strong drive in prepaid revenue growth while maintaining ARPU, which is quite important as well. Our data-led strategy is showing results. We have managed to also ensure that the recovery of the postpaid effect from last year is now showing in our EBITDA recovery.
Yes, Louise, you have put pressure on his name. He has promised that 25 by 25 will be delivered. Equally, we continue with focused CapEx investment in our network, ensuring that our CapEx investment is aligned to our missions of responsible management of our roaming costs. As I mentioned, this has resulted in continuous focus on reducing our roaming costs as a percentage of revenue. We've also effectively rolled out the spectrum allocation of our sub-1 gig, which has resulted in us ensuring that the CapEx bracket that we have for mobile allows us to be more efficient in how we roll out the spectrum. Touching on OpenServe, once again, the focus remains on driving our NGN growth, which you can see there continues to drive the growth in OpenServe.
A strong balance between not just the growth in NGN, but also cost efficiencies, which we've seen in a strong recovery in the EBITDA margins in OpenServe. Aligned to that, OpenServe is maintaining the highest connectivity rate in the market. Althon, correct me and say the highest connectivity rate actually in the world. Is that right, Althon? And I think it talks to the efficient utilization of our CapEx, ensuring that it's not just passing the homes, but also connecting the homes. Key driver is our service levels. Constant focus in the OpenServe team is ensuring that our service levels are of the highest. Further to that, our efficiencies have resulted in the costs that you see, in that as a result of migration to newer technologies and next-generation platforms, we are more efficient in how we utilize the men and ladies in the ground.
Therefore, we could extract more costs. In BCX, despite the decline that we see in converged comms, we're encouraged by the positive shoots we are seeing in IT growth, which is not significantly offsetting yet the decline in converged comms, but does give an indication that certainly the focus in that NGN platforms is showing positive results. In SwiftNet, we are still showing the positive growth in towers, particularly that growth in EBITDA margin. In Gyro, we continue, as part also of our overall cost efficiencies, exiting buildings where we no longer require to have overall Telkom employees, and that has resulted in us disposing properties, returning cash into the organization. We will continue with such exercises. We've identified further properties to be disposed. We will update the market as we go along with this project.
Further, a big focus on driving our ESG focus is driven by the Gyro team, and this is reflected in our reports. I will now hand over to Nonko to give an update on the financial numbers.
Thank you. Thank you. Thank you, Serame. Good morning, ladies and gentlemen, board members, present, Exco members, and colleagues from Telkom. Good morning. I'll take you through the financial numbers that were driven from the operational performance that Serame has touched on. Maybe just to start, Serame has already shown the slide, but if I can just go back to it and again highlight solid performance financially with the revenue growth of 1.6% to ZAR 43.2 billion. I'll take you through a bit of detail on the normalized EBITDA. You would recall last year there's a number of activities that Telkom drove, including restructuring, and we had to deal with impairment. I'll give you a bit of a detail in that.
But at this point in time, looking at the normalized numbers, we delivered 5.2% in EBITDA growth to ZAR 10 billion and an improvement in the EBITDA margin to 23.2%. From a loss position that we reported last year of ZAR 9.9 billion, we are reporting a profit of ZAR 1.9 billion. And in terms of the earnings per share, baseline earnings per share also up, and I'll just take you through further details and some waterfalls in some detail. But also, we saw an improvement in our net debt to EBITDA. Last year, we reported 1.8 times, and this year it is 1.7 times, largely coming from the operations. And we've told the market that in the SwiftNet proceeds, which are not yet with us, we are looking at further driving further reduction in that net debt to EBITDA.
But this is really coming from the underlying operations in the business. We have reported free cash flows of ZAR 424 million positive, coming from a ZAR 2.7 billion negative in the previous financial year. That's another significant improvement in the financial performance. Now, to just give you a bit of details in terms of the financial statements that we are reporting, starting with the income statement or statement of financial profit and losses, as we call it these days. And I've already mentioned the net profit for the year of ZAR 1.9 billion, right at the bottom, third line from the bottom, from ZAR 9.9 billion. If you break it down and start with the revenue line, we're reporting the ZAR 4.3 billion, ZAR 43.2 billion coming from ZAR 42.5 billion to 1.6% growth.
What I just want to highlight there, which is in the note one at the bottom there, is that we were dealing with the implementation of IFRS 15, specifically in our BCX business, and we needed to restate our revenue line in comparison to what we had reported last year. And this is why we're talking about restated 2023. This restatement in revenue did not impact the EBITDA line, though, because the requirement was that we needed to disclose certain elements of our business activity as though we were agents, not principals. That is, we don't report revenue and cost of sales, but instead the net margin. So the impact of that was basically to take away from revenue, but take away from costs, and the net impact is the EBITDA that we would have reported in the previous year from this process. So that is the restatement element.
And then in relation to EBITDA, what we did last year as well was to report, or rather to accrue for restructuring costs, there's ZAR 1 billion that we needed to bring into the books as part of the restructuring and some of the exits that were coming through even in 2024. So what you will see in our financial statements is that in the last financial year, there's ZAR 1 billion we accrued for. There's a cash flow that we have as an outflow in the new year. Hence, again, we talk about normalization in the EBITDA line. The rest is probably fine, except that we also just highlight that depreciation line where we are reporting ZAR 20 billion versus ZAR 5.5 billion. And again, in there, we've included that impairment line of ZAR 13 billion in the reported number.
But if you then normalize out the ZAR 13 billion and compare depreciation for like for like, you are moving from about ZAR 7 billion depreciation in 2023 to about ZAR 5 billion in 2024 because your asset base has been rebased downwards with the impairment that we took last year. So a lot of normalization we're talking about relates to the activities that we drove in the previous financial year. Then just to go through some detail in the revenue of ZAR 43.2 billion, the huge contributor is still our mobile business, contributing ZAR 22.6 billion and a growth of 4.5% compared to the previous year, as well as the information technology space where we saw growth of 10% to ZAR 6.1 billion.
What we then see is that if you look at the next generation revenue versus the old traditional, we're quite comfortable that much as we continue to see a drop in the legacy revenue, the next generation, or rather where we are investing, we are beginning to see a positive impact. Hence, we are seeing the growth in those areas in double digits in some respects. And then just on the EBITDA details a bit, we reported about ZAR 8.5 billion last year because of the billion rands. But if you just normalize that and say that was a one-off cost, we would have reported an EBITDA of ZAR 9.5 billion last year in comparison to the 10. So that's how we get into the 5.2. But to highlight on this slide is that the growth in EBITDA is driven by growth in data revenue as well as information technology.
Therefore, the left-hand side that talks to fixed revenue coming from the legacy business is still dropping, but we're quite comfortable that the growth is beginning to be higher from the next generation business. The operating expenses, we've managed well below inflation from all the activities of the previous year, but all the cost optimization programs that we continue and will continue to drive into the future to ensure that the underlying performance and growth is sustainable. The next slide is just a breakdown on headline earnings per share. Again, because there were significant movements there, starting with the left-hand side where we were just highlighting the basic earnings per share, moving from ZAR 0.71-ZAR 3.85, but also headline earnings per share from ZAR 1.24-ZAR 3.76.
But on the right side, what we just wanted to highlight here is that the impact of EBITDA growth is showing in our earnings per share as well as the impact of the rebased asset base with a lower depreciation impact. Although this was offset by the higher interest expense, we saw quite significant interest rate increases in the year past. We're hoping we're at stable levels and hopefully we'll see decreases in interest expenses going forward. But those three elements are basically showing through in our earnings per share. We also have a view of the continuing operations. So if you look at our booklet, you will see that we indicate the continuing operations and the SwiftNet as a standalone and then the net of that.
What you then see there is still growth on continuing operations with regards to headline earnings per share and basic earnings per share, but for the very same reasons because the activities have continued in the mobile and fiber business, which is not necessarily in the mast and towers space. Then a bit of detail in our free cash flow, the first line there indicating that we moved from ZAR 6.7 billion to ZAR 11.3 billion. I've got a slide that gives you a bit of a breakdown of how we moved from ZAR 6.7 billion to ZAR 11.3 billion.
But maybe to highlight a few lines here is in terms of the repayment of lease liabilities, in terms of our leasing arrangement, you can see that it's fairly flat in rands and cents, but the significant movement is coming from our finance charges that we had to pay, moving from ZAR 1.4 billion to ZAR 2.3 billion. And if you look at our balance sheet, though, you will see that debt remained fairly flat. In fact, we're net, we repaid the debt in the past year. But the bigger impact is indeed from the interest rate increases that we saw coming through from the Governor of the Reserve Bank over the period in the last financial year, which then affected us because our structure is that we've got fixed and floating rate loans, and from the floating loans, then we were impacted negatively.
We also paid in the last financial year ZAR 972 million, which is the last tranche in relation to the spectrum. We paid the restructuring costs in relation to the accrual that we would have put through in the previous year, and that payment going through as people were exiting the business in 2024. Just to give you a little bit more on the ZAR 6.7 billion moving to ZAR 11 billion, you can see that the profit before tax grew by about ZAR 1.9 billion or ZAR 2 billion. Even if you take off the non-cash items, which is the third waterfall of about ZAR 900 million, you still have over ZAR 1 billion rands improvement in that regard. We then have continued to look at options and opportunities to improve in our working capital management.
One of the elements that we drive in this regard is the handset sale with regards to the postpaid business. Just about ZAR 1 billion we were able to process in this financial year, and that was cash received earlier than we would if we waited for the 24 or 36 months in relation to the postpaid arrangements that we have. That's how you then get to the ZAR 10.2 billion. If you take back the one-off of ZAR 1 billion, you are at ZAR 11.3 billion as the first line we showed on that slide. Moving to the capital expenditure, we have spoken about guidance of ZAR 14 billion-ZAR 16 billion. Previously, what you will then see is that we are still within guidance, but at the lower end. The 14.2 includes the payment for the spectrum that we made.
But if you look at the pie charts, in 2024, close to 77% of what we invested in capital expenditure was to drive our fiber and mobile requirements, and there are other small investments in other areas. So that is basically, again, talking to the smart drive with regards to where we deploy our capital. And it is indeed a limited resource that we have to make sure that we deploy where we are expecting returns. And in this regard, one of the things you will see in the booklet is a section that talks to ROIC. We started reporting on that last year, and we've seen an improvement as well. If you look at the fair value calculation of that, we didn't include it in the slides, but there is a section which indicates that I think last year we reported about 2.5, 2.6.
We've improved to the levels of about 6.8 this financial year. Again, it's talking to the returns and where we deploy our capital in this regard. Still, a fair amount of work to do, and we will continue to try and invest in the right places. The balance sheet is still strong. We have a cash balance of about ZAR 4 billion in the bank as we close the financial year, but also committed and unutilized facilities of over ZAR 5 billion. That gives us a huge headroom to be able to deploy cash where it is required in capital expenditure in other areas. We are having to strike a balance, a good balance between ensuring that we are comfortable with the gearing level at the levels, and therefore the deployment is going to be managed closely. In terms of the interest-bearing debt, it remained fairly flat.
In fact, we were in a net paying position with regards to our debt. Therefore, we landed at 1.7 times, as I indicated earlier. With regards to our loan covenants, we're quite comfortable as well that we're far from any risk of a breach position, and it's areas that we're monitoring very closely. So you can see that the net debt to EBITDA, as required by our lenders, is three times, and we are at 1.7 times. With our maturity profile, we've seen a significant improvement as well. We've managed where necessary to refinance and remove the pressure points in the coming years. If we look at 2025, we have about ZAR 2.1 billion that's maturing in the coming months. With the facilities available, we're quite comfortable that we will be able to deal with that as it matures and from operations as well.
So moving to the medium-term guidance that we've given previously, we continue to monitor ourselves against these guidance levels we've given. And you can see then that with regards to revenue, specifically in the new revenue streams that we're looking at, we guided low to mid single digits. We're delivering 1.6, but that's net of legacy and good performance from the growing areas. And then in terms of the cost management and growth in EBITDA, we reported 5.2. Capital expenditure, we're at the lower end of the guidance, and we have been reflecting in this regard. We think with the investment we've made in the past, we may not necessarily stay within the levels. And you will see that we are indicating 12%-15% as a range compared to probably a higher range that you would have seen in the previous reporting periods.
With regards to debt and the balance sheet, we are at 1.7 times within the guidance that we have given of 1.5-1.9 times. So the board had taken a decision about 3, 4 years ago to suspend the dividend as the organization was going through challenging and turbulent times. In the recent board meeting, the board took a decision to reconsider the dividend position and restate the dividend policy. We are not declaring a dividend in the 2024 financial year. However, we believe that in 2025, as we go through the current financial year, we will be able to reconsider based on the performance that we'll see. But if you look at the dividend policy, it will largely look at the free cash flows from the underlying operations.
We've got a number of safeguards in terms of not just the free cash flows, but ensuring that the performance in the business is strong enough. We're looking at paying out 30%-40% of the free cash flows, and we would have taken into account any capital expenditure requirements in that regard and any matters that may come up as requiring attention once off. With regards to other elements, the board will consider if there are other opportunities. You would see that we are not intending to declare any interim dividend, and those would be considered if there is any opportunity from any other cash that may come to the business. It's going to be very critical as we look forward to ensure that the strength of the balance sheet takes priority and is observed.
Future capital expenditure obligation, but to ensure that we maintain a strong asset base is also taken into account. We will ensure that we are liquid and solvent to make sure that when we pay the dividend, it is not coming from debt, but from cash from the operations. Maybe as the last slide, I'll talk to capital allocation and how we are thinking about it. Obviously, Serame spoke about the operational performance of the business. We will continue to look at opportunities in terms of the strategic investments that we need to look at and all the activities that we build into our business planning processes. Our sources of capital primarily are going to be the operational cash flow, as I indicated earlier, that we will continue to look for, ensuring that it's getting stronger and stronger.
The debt issuance, as I indicated, we are going to be in the market in the coming months to raise debt, but within the financial framework that we are looking at. With regards to also managing debt, as I indicated earlier, when we worked with SwiftNet, we said a significant portion of that will be utilized to strengthen the balance sheet further so that we've got much bigger headroom for any future requirements because we would want to continue working with the capital markets in this regard. Then, in terms of the uses of capital, as I indicated, the board has now reflected on the dividend and has restated the policy. So we will look at that as we progress with the coming financial years. But importantly, it is to ensure that we invest for growth and maintenance, but also observe where regulatory requirements must be looked after.
That is my last slide. I just would like to thank everybody, including the finance team and the operations that have worked hard in putting together these results, as well as the support from our external auditors to get to today. Thank you very much.
Thank you, Nonkululeko. Just to recap on what we promised last time we met, we did promise that data consumption would drive our growth. I think we've delivered on that. We did promise to prioritize cash generation. I think we've delivered on that. We are focusing on OpEx rationalization. I think last time we spoke, Dirk and I talked of a key program to try and extract ZAR 3 billion worth of costs out of our organization. That is ongoing. We talked about prioritizing our CapEx on key growth areas. We continue on the journey. We talked about power and focus on ESG.
We have delivered on that. I think both as an industry and the micro conditions that we face are quite challenging. But as an organization, we feel that we are geared for such conditions. Our priorities remain unchanged. We'll continue the focus on NGN revenue growth. We'll continue to drive the focus on costs and ensuring that our top-line EBITDA growth gets closer to the target of 25% at top-line group. We will continue with smart CapEx deployment and cash generation and, of course, driving on ESG delivery. We believe that Telkom is poised to deliver against our promise. We do have mission-critical infrastructure housed under the umbrella of InfraCo. We feel that the headwinds that we faced under impairment are now behind us. The business is focused and geared on the journey ahead.
The journey of SwiftNet will certainly yield positive results for our balance sheet and future ambitions going forward. We have a robust customer base, certainly in mobile and our fiber customers, that is yielding the results that we seek and good potential for partnerships to extract more value. We have the right team, and we continue to enhance the right team to drive our missions. In closing, internally, we aligned ourselves to execute as one Telkom. We will continue to ensure that we seamlessly connect our customers to a digital future. We'll continue to connect South Africans to a better life.
Thank you for joining us today. We will now open for questions and answers. Jonathan Kennedy from Prescient Securities.
Just on the dividend policy going forward, just wanted to clarify if you would look at free cash flow after CapEx, excluding any once-off restructuring charges or payments, because those have been fairly frequent as you optimize the business. And then also on CapEx, that's been a positive surprise of the recent past. And just wondering how you envisage nominal CapEx to develop. Do you think that could go a little lower given plans to optimize there? Thank you.
Yeah. So if I can just start with the dividend policy, and we're looking at it and saying we need to look at free cash flows that we would have disclosed in the financial statements. We need to take care of capital expenditure requirements, but the once-off would have to be taken care of indeed because they are cash outflow where they arise.
If you look into the future, you can see that if we didn't have the once-off of ZAR 1 billion rand with regards to restructuring, that ZAR 400 million could easily have been ZAR 1.4 billion rand. And therefore, we will take into account any once-off elements that come through and look to strengthen operational performance to ensure that we can get to the levels.
I think, Jonathan, to CapEx, that's been your favorite question. I think that's why the guidance we've said, because in 16% has been on the high range. We've been tracking at the 14% level. I think that should be the new norm. And that's why we've changed it to reflect that. Yeah.
Thanks. It's Louise Pillay from Investec. Just following on from the previous question, maybe if you can just give us a bit more color on the rationale for prioritizing dividends over debt reduction.
I mean, in terms of your long-term capital structure, can we expect net debt to EBITDA to go to below 1x? Because I think that is quite important. And then in terms of this InfraCo strategy that you have, your CapEx guidance of 12%-15%, what informs that? Because generally, InfraCo companies spend a lot more in terms of CapEx to sales. So if you can give us more color around that. And then two other questions, maybe one for Nonkululeko around cost savings and cost optimizations. If you can give us more color on where the low-hanging fruit is, especially can we expect more labor cost savings coming through over the medium term? And then the last question is on mobile service revenue market share gains. You are taking market share from the incumbent operators. What is driving that?
And can that be sustained over the near term? Thank you.
All right. So on the dividend policy, we certainly are not prioritizing the dividend policy alone. It's quite a balance. It's still important for us that the balance sheet gets stronger. We are not changing the position in terms of the circular we issued with regards to Swiftnet, and we've made significant progress in that regard as we received the shareholder approval in May. So we are just working through now the regulatory requirements with ICASA and the Competition Commission. So the split that we've highlighted in the circular that said if we receive the ZAR 6.75 billion rands, close to ZAR 5.7 billion will go to reducing debt will take us a long way in improving the net debt to EBITDA already.
And therefore, that leaves us with a very long term on sustainable earnings to continue to improve, but also consider the dividend payment where we are quite comfortable. And this is why there are safeguards in regards to the actual declaration and the comfort that these free cash flows. With regards to cost optimization, I think we have done enough work with regards to the people element of the business. And in many regards, I think significantly whatever the board has set out to be done has largely been done. So when we look at further cost optimization, we are actually looking at other areas. It's quite important that we look at all other cost areas.
We've got contracting arrangements that we may well have to look and say, "Do we have to renegotiate this contract because we don't need as much a service or whatever it is?" So it is going to be us looking at the broader other ways of doing business to improve costs rather than necessarily focusing on the people.
So let me add further to that. I think in terms of the range, I mean, we have talked of a range of between 1 and 1.5x. I think below 1 is it depends on the market. I think that becomes a very lazy balance sheet. And we've always maintained that we'll keep a range of between 1 and 1.5x. I think that's our sweet spot. Secondly, you're right that InfraCo do spend a lot of CapEx from start.
What we've always said is that the investment in fiber did not start last year. Telkom has been spending in fiber almost 30 years. We are starting now to see the results of that, that we have been investing in fiber for quite a long time. It's that investment that's allowing us to have now that edge that we don't have to be so significantly capital intensive because of that long-term investment we've had. In terms of mobile, and I think good question in terms of market share. It's what I've been saying for quite some time, Louise, that it's very important for us not to see market share in terms of SIM share, but more importantly, revenue share. Because what you are seeing now is growth in terms of data revenue share.
And that's where the big indicator at a 6.8% service revenue; that's where the growth is coming from, that the market is swinging quite significantly now to data usage. And that's where the Telkom Mobile value proposition has been, that it has been a data-driven organization. And where we're getting close in terms of our market share growth is looking at share of data and share of data revenue, which is where the big indicator for us. And while the market at SIM level seems flat, what's key for us is the data consumption and data revenue is where the big driver is. And that's where we see the continued growth for Telkom Mobile. Yeah. I think we covered most. And you're right, from a cost perspective, it's not just labor.
If you look at some of the stats we've included, for example, at OpenServe, because of the move to more NGN and fiber, we've shown a stat that there's less visits, for example, which means you can now utilize your staff even better because less visits to repair copper means that you're more efficient. It's those type of initiatives which reduce your costs.
Yeah. Hi everyone. It's Preshendran from Nedbank. Congratulations on the results, especially on mobile, very good growth there. If I can ask a few questions. Firstly, on mobile, how much of your voice and data traffic actually roams? And if you can give a split, because I assume that all of your 2G voice traffic actually is on roaming. And then coupled with that, the reduction in your roaming costs, I saw it was 8.5% down. How much of that was due to less load shedding?
So you didn't have to push onto other networks versus what Serame just alluded to, where subscribers are actually moving off 2G and into more data-enabled network service. Then on the top line for mobile, what's the sustainability of your mobile top line? It was quite strong. I mean, in that last quarter, I think I calculated it as more than Vodacom and MTN put together. And still, you were double that. How sustainable is that? And also now that SwiftNet is no longer part of the family, what would the cash earnings trend like? And what I'm alluding to basically there is the lease cost that's going to be implemented by what would be an independent SwiftNet once it's no longer part of the family. And next is onto BCX.
I noticed the margins were down, but I remember you guys were saying that the revenue mix was previously due to more chunkier hardware, which is low margin. Is your strategy now to obviously push your group EBITDA up to basically close the taps on those hardware sales and limit that? Yeah, I'll leave it for then on the circle back. Thanks.
Cool. Okay, Presh, lots of questions. Okay, let's start. Did you say a few questions, Presh? Right, let's start with roaming. So in terms of roaming, it's actually not a significant amount of traffic roams to start off with. So I think it's less than 5%. 2%. Less than 2% of your traffic is roaming. You're right, most of 2G and 3G, which we are very little. So we've always maintained, I think we have less than 300,000 odd 2G and 3G subscribers. That's all roaming.
So that's very important to drive that. A significant portion of that, I mean, load shedding, if you look at the impact of load shedding year-on-year, it wasn't that significant. I think there was a 10% increase in load shedding. So you can't really count load shedding in the past year. Kudos to Eskom on that. So load shedding did not play a significant impact. And the investments in load shedding did mitigate that. So the reduction in roaming, in fact, partly was load shedding, but two, the guys who stayed on the team have been quite ruthless. There are two partners. So we've got both MTN and Vodacom. And you are able now to roam on both parties. And you've got two different contracts. And it is the commercial savviness of the team that could negotiate quite favorable rates with that.
In terms of, is that sustainable? We believe it is, both in terms of the pricing, the proposition that says that, as we've always maintained, that our ability to produce a low cost per megabyte is sustainable. Number two, the fact that we've never had sub-1 gig spectrum now makes our CapEx rollout far more efficient, which is two. And number three, if you look at the pricing differential, we are able to sustain that despite the market having said that one spectrum is available to the other competitors would not be able to sustain this. We've shown that we sustained it. There was a further question saying price increase coming up. We have followed the market. We've also effected price increases effective 1st June. So we're following the market, maintaining our pricing and growing at the same time. So we believe that it is sustainable at those levels.
Lease cost impact, they're actually not significant. So what we were paying internally, you will see now reflected externally. Those prices were market-related. So it's not going to be a different pricing. And in total impact, Telkom Mobile is on over 7,000 sites, of which 1,000 of those were in SwiftNet at the same commercial rates as others. So it's not going to be a significant impact overall on the cost of those rentals to Telkom Mobile. In BCX, you're right. Hardware-software mix is always a tricky one. You need the hardware to get into the corporates in order for you to grow your software mix. So it's always chicken and egg because the hardware gets you into the door. And therefore, you can then build your software mix over that. The big focus for the team, obviously, is once you're in, then layer the software elements to focus there.
The big focus, obviously, is the software, the cloud services. That's where their margins are in a competitive environment, of course. It's not preferred to always be driving hardware, as you rightly said. It's high cost, low margins. But the key thing is drive then the services and the cloud services to ensure that you get the stickiness and the longer-term contracts in there. I think I covered most of your questions, right?
Thank you. I'm going to now read one from the webcast platform. This one is for you, Nonkululeko. Just a clarification around the dividend policy is from Jared from RMB Morgan Stanley. You've guided to a dividend yield in line with SA Telco peers, which is currently 4%-7.5% range. This implies a material step-up in free cash flow to anywhere between ZAR 1.2 billion-ZAR 2.6 billion from the current ZAR 434 million.
Should we assume you have changed how you expect to allocate the proceeds from SwiftNet transaction, or will future dividends be largely paid from underlying free cash flow? Thank you, Nonkululeko.
Yes, so the free cash flow we're talking about have to come from the underlying business for us to pay a dividend. So the move, and I think it's similar to the earlier question we dealt with from the audience in the room, is that we're looking at our planning forward and, yes, anticipating some one-off items that may come through. But we are working towards a stronger free cash flow position to ensure that we can be able to declare dividend.
In terms of the SwiftNet proceeds, we would continue to utilize a significant portion of that to pay down debt so that we can get back to the guided range of between 1x-1.5x. That would then give us space to basically be able to invest much more to strengthen further the underlying free cash flow. The position has not changed. Yes, we did look at benchmarks in terms of where our peers are pitching their dividend, and we're quite comfortable that we will be comparable.
Thanks, Nunkoo. Just one more around medium-term guidance for you. Despite the strong operational period in the second half of 2024 and the expected tailwinds in FY25 from a full year of labor restructuring benefits, your medium-term guidance has not changed. Are there any risks in the outlook that aren't immediately obvious, or are you being cautious?
So I suppose the issue of the economic pressures we've spoken about, and that applies to our performance as well. The issue of the customer that is under pressure with all the challenges is an issue we're looking at. This guidance that we are working with is between 2023 to 2025. I think as we get stable into the future, we will certainly come back to the market where we think there's an opportunity to revise the guidance. So for now, we believe we just need to stay within what we've guided. Once we see much more improvement, we can then come back and guide further.
Thank you, Nunkoo. There seems to be a lot more financial questions for you online. There's one more around, I think it was around your capital allocation framework. Could you please expand on the alternative funding solutions you're considering? Are you thinking about the proceeds from value unlock transactions, or are there other items?
Yes, thank you, Nondyebo. So largely, we certainly are looking at value unlock opportunities where we would probably realize cash. And this is where we would want to take a decision whether it would be better invested to other growth areas in the business. Or if there is opportunity for a special dividend, the board would decide in that regard depending on the requirements. But from the underlying operations and basically all the work we have committed to with regards to value unlock, there may well be other funding opportunities and solutions that will come through.
Okay, I'm now going to check on the Chorus Call forum. Judith, if there are any questions for Serame and Nonkululeko.
Thank you. Our question comes from Jonah Bradley of AMSO. Please come ahead.
Thanks very much for the opportunity to ask questions. Congratulations on a good set of results. Just two questions from me, please. My first question is on the working capital benefit to free cash flows. If you could please unpack that a bit more. I mean, was this mainly the handset book sale and just your thoughts on the sustainability going into next year? Secondly, you mentioned price increases for mobile. Just to clarify, is this on your mobile prepaid products as well? And is that in line with competitors? And if you can, just give us the effective percentage increase for those mobile prepaid product price increases. Thank you.
All right. If I can start with the working capital opportunities, we are certainly looking at, let's say, releasing cash from working capital.
We are looking at the various business units, for instance, with regards to the inventory holding, where there are opportunities to do something in that regard. That is where we will certainly release cash. We believe there are opportunities in that regard. With the debtors or accounts receivable, we would continue to look for opportunities in our postpaid business to release cash with regards to the handset sale. There are opportunities to continue in that regard because we will continue with our operations with regards to the postpaid. But also in terms of just improved cash collections with regards to all our various customers to ensure that we improve the days outstanding. Currently, we've had to make provisions, as you can see in our numbers, with regards to expected credit losses.
But as things improve, we would anticipate again a significant improvement with regards to those customers that we may have made provisions for. So absolutely, we are looking at opportunities. For the level of operations, we think there is a sustainable level of an improved working capital management and more opportunities.
I think in terms of Jonah, thanks for the question. The price increases average is about 5% across both post and pre. I think it's been treated in similar patterns in that depending on the bundles, particularly on the lower end, it's a bit of a give and take. So there's an increase, but also just to manage the impact on the customer, there's value given back as well. But the net impact is about a 5% increase, both pre and post on mobile. I hope that covers you, Jonah.
Thanks, Serame. That's all the time we have questions for. Do you have any closing remarks ?
Yeah. Practical as usual. No. I think thank you for your attendance and supporting. I think it would be remiss of me not to thank the Telkom staff. It has been a tough year. I think we've showed up and showed up strong. And for us, it's to continue the good work that we've delivered and make sure that we show up even stronger next year. Thank you to the board for your support. And we'll see you again next year.
Thank you very much.