Openserve’s stabilisation path is well underway in turning around several years of revenue declines. As part of our transformation journey, Openserve’s overall revenue mix evolved into next-generation-led products and services, which now represent more than half of our revenue base. Openserve continues to focus on future growth areas and has seen a sustained uptake in high-capacity links and an increase in demand for fibre services across both the carrier and consumer segments. However, the impact of the post-pandemic recovery is still evident in the challenging performance in our small and medium businesses. To improve our service delivery, Openserve enhanced customer engagements and accelerated digitisation during the year.
Key strategic focus areas
During the financial year, Gyro continued to advance the development planning work for properties in Phase I of the development project pipeline. The development pipeline comprises mixed-use, industrial, student accommodation and residential apartment opportunities. Four development projects are in stage 3* of development planning and will be ready for construction in the next calendar year.
The continuing COVID-19 operating environment impacted the pace of obtaining municipal approvals in instances, but did not severely hamper the progress of the development planning process. We identified and engaged in investment partnership discussions with several experienced development investment partners for projects that are in stage 2^ and stage 3* of the development planning process. We expect to conclude development partnerships and to commence construction of projects in the 2023. The Gyro business model is to assume minority stakes in the development projects that we originate by contributing the land as equity, including the equity invested in the pre-development planning activities.
Enhance building costs and operational efficiencies Gyro continued to reduce the property operating costs through various cost-optimisation interventions that encompass rationalisation of the property portfolio. Telkom adopted a new hybrid way of working (majority of employees operating partially at the work premise and their place of residence) that optimises Telkom’s property space requirements. The result from the hybrid way of working will be a reduced property footprint for operational purposes that links with the decommissioning of legacy equipment and more technical properties. In the current year, we sold 40 properties for R66.8 million, the proceeds of which will be realised in the upcoming financial year. We plan to dispose of further properties in the new year as more properties are decommissioned or are no longer required for operations.
During the financial year, we continued to implement energy and water-saving initiatives to optimise costs through technical project interventions to reduce energy and water utilisation across the property portfolio. These initiatives will continue in the new financial year in our environmental focus to pursue carbon neutrality and net zero as part of the Telkom ESG Strategy.
| Stage 1: Securing the appropriate land and rights to undertake the development and the appointment of professional teams. | |
| ^ | Stage 2: Establishing the viability of the project and the preliminary development programme. |
| * | Stage 3: Developing the approved concept to finalise the design and to outline specifications, cost plan, financial viability and the documentation programme for the project prior to construction. |
We expect tough trading and market conditions to remain amidst the slow recovery from COVID-19.
We will continue with advanced property development planning in property sectors with stable and growing demand for space and also taking into account supply dynamics. A key focus for the next financial year is to conclude partnership agreements with investors and/or co-developers and commence construction of the various identified projects in 2023.
As we adapt to the hybrid model of working, we will continue with our efforts to minimise property operating costs through various interventions that will include an environmental focus to pursue carbon neutrality and net zero as part of the Telkom's ESG Strategy. We will accelerate the decommissioning of properties that are no longer required for operational purposes and the disposal of all non-core property assets that are not fit for repurposing or development opportunities.
We will focus our efforts on optimisation and expansion opportunities in respect of existing data centres and we will also assess opportunities for edge and conventional data centres by reviewing the existing property portfolio.
