JSE-listed telecommunications company Telkom has swung back to profit for the year ended 31 March 2024, it reported on Tuesday.
The group said total headline earnings per share (Heps) increased to 376 cents, driven by an improved operational performance. However, Telkom is holding back on paying a dividend until its 2025 financial year.
“From a loss position in the prior year, profit for the year also increased by more than 100% to R1.9 billion, boosted by the non-recurrence of once-off restructuring costs and lower depreciation,” it pointed out.
“Higher interest rates increased net finance costs, compared to the prior year,” the group however added.
The group’s shares jumped over 5% in morning trade, following the release of its latest annual results.
The majority state-owned company said it made good progress in the 2024 financial year with “strong operational performance”.
Mobile growth
Telkom upping group revenue was driven by an increase in mobile data and NGN fibre data connectivity revenue, up 10.6% and 14.5%, respectively.
“This was partially offset by a 23.4% decrease in fixed-voice revenue due to the ongoing migration to modern technologies such as fibre and LTE,” it added.
Telkom’s capital allocation priorities include strengthening its balance sheet by paying down debt in what it calls the “higher-for-longer” interest rate environment and capital expenditure to drive future growth.
The company is positive that the targeted debt levels will free up cash flow by reducing financing costs.
Dividends
The group said it hopes to be able to pay dividends at the 2025 financial year-end.
“A revised dividend policy has been approved by the board … The policy proposes a dividend payout range of 30% to 40% of free cash flow after taking into account capex investments. The dividend will be declared and paid on an annual basis, with a resulting dividend yield comparable with local telecommunications companies,” it explained.
Telkom expects its future growth to come from the efficient deployment of capital for its mobile business while exploring radio access sharing with other mobile network operators (MNOs). With its fibre business Openserve, which has a national footprint, Telkom aims to reach a 50% connectivity rate for homes and enterprises across South Africa.
“The immediate- to long-term rollout of 5G, and equipment upgrades by MNOs due to migrate 2G and 3G customers by the end of 2027 to newer-generation mobile connectivity in 4G and 5G technologies, will continue to drive fibre connectivity rollouts to towers and 5G small cell sites,” the group said.
Telkom added that it made progress in the proposed disposal of its tower business Swiftnet for R6.75 billion to a consortium of equity investors. Its shareholders approved the transaction on 24 May. – moneyweb.co.za
