Telkom beats profit expectations in year to end-March

Telkom CEO Sipho Maseko. Picture: MARTIN RHODES
Telkom CEO Sipho Maseko. Picture: MARTIN RHODES

Telkom, the partially state-owned telecoms group, has reported better-than-expected earnings for the year to end-March thanks to strong growth from its mobile business.

Operating revenue rose 5.3% to R41.8bn and earnings before interest, tax, depreciation and amortisation (ebitda) grew 8.5% to R11.3bn. According to Bloomberg data, analysts expected ebitda of R10.9bn.

Profit after tax rose 11.5% to R3.3bn and the group said it will pay a final ordinary dividend of 249c, taking the full-year dividend to 362c, a 2% increase.

Telkom said mobile service revenue increased 58.3% thanks to 85.9% growth in active subscribers, to 9.7-million customers.

However, revenue from the group’s fixed business fell 7.9%, with  fixed-voice and interconnection revenue declining 14.3%.

Telkom said it plans to “accelerate” investments in its network.

It aims to build 2,000 new towers over the next three years, “underpinned by Telkom Mobile’s demand for new sites”.

On Friday last week, Telkom’s shares reached their best level in a decade, thanks partly to rising interest from foreign investors.

Local ownership of the partially state-owned telecoms company has dipped to about 61.5%, from 65.8% a year ago, according to Bloomberg data.

Investors are also anticipating a possible unbundling of the group’s properties.

In November 2018, Telkom CEO Sipho Maseko said the company would consider spinning off its property portfolio as a “mega” real estate investment trust (Reit) to unlock value for shareholders. Its property assets had an insured value of R24bn at the time.