Telkom’s earnings gain on stronger mobile sales

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

Johannesburg - Telkom said first-half earnings rose 20% as South Africa’s biggest landline provider reported a maiden profit for its faster-growing mobile business.

Earnings per share excluding one-time items were R3.36 in the six months through September, the Pretoria-based company said in a statement on Tuesday.

That was in the middle of a range forecast by Telkom last month. Earnings before interest, taxes, depreciation and amortisation at the mobile unit were R214m ($15m), compared with a loss of R37m a year earlier.

“Our mobile business has been able to establish itself as a meaningful player in the market,” Chief Executive Officer Sipho Maseko said in the statement.

“We intend to grow our scale in the mobile market through focusing on the post-paid and data market where we are already making inroads.” Under Maseko, Telkom is developing its mobile-data service to offset the decline in revenue from landlines.

The unit is the country’s fourth biggest, behind Vodacom, MTN, and Cell C.

Telkom, about 39% owned by the South African government, has also been reducing costs, and has cut the workforce to just over 12 000 from 21 000 three years ago.

Telkom will pay an interim dividend of R1.31 a share, compared with R2.45 a year earlier. Operating revenue gained 21% to R20.2bn as the company integrated 2015 acquisition Business Connexion.

The stock has declined 7% this year, valuing the company at R31bn rand.

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