Telkom raises dividend 56% as carrier enters next growth phase

Telkom. (Duncan Alfreds, Fin24)
Telkom. (Duncan Alfreds, Fin24)

Johannesburg - Telkom said full-year earnings and the dividend both rose as South Africa’s biggest landline provider enters a new phase of growth by giving more autonomy to its four business units.

Earnings per share, excluding one-time items, increased by 12% R7.31 in the year to end-March, the Pretoria-based company said in a statement on Monday. Operating revenue gained 9.8% and the dividend payout rose 56% to R4.22 a share.

READ: Telkom to split company into four units - sources

“We made significant strides in a difficult operating environment which was characterised by regulatory uncertainty, increased competition and a weak economic environment,” chief executive officer Sipho Maseko said in the statement.

The integration of 2015 acquisition BCX into the business-to-business division and the accelerated growth of the mobile-phone unit drove the earnings increase, Maseko said.

Following a three-year turnaround strategy that returned Telkom to profit, he is giving the company’s four business units more independence to further boost earnings.

The phone operator, almost 40% owned by the South African government, started a mobile unit, the country’s fourth biggest, to offset a decline in landline use and challenge market leaders Vodacom Group and MTN Group.

READ: Telkom said to plan breakout of tower assets

Telkom shares rose 3.1% to R75.99 on Friday, and have soared more than 400% under Maseko’s watch. That values the company at R40bn.

Capital expenditure increased 43% to R8.7bn as the company invested in fibre networks and the wireless business. Mobile subscriber numbers rose by 48% to about 4 million.

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