Leaner Telkom flags sharply higher earnings — A Telkom communications tower in Pretoria

Telkom expects its headline earnings per share (Heps) from continuing operations to climb 45-55% for the year to end-March, the JSE-listed telecoms group said in a trading statement on Wednesday – a performance it has attributed to cost discipline, lower debt servicing costs and the continued payoff from its data-led strategy.

Heps from continuing operations is expected to come in at 677.9c to 724.6c, up from 467.5c in the 2025 financial year. Basic earnings per share from continuing operations is expected to rise 20-30%, to between 679.2c and 735.8c.

Telkom attributed the result to “strong underlying operating performance, continued focus on structural cost optimisation and lower finance charges resulting from reduced debt levels”. The deleveraging story – partly funded by the R6.75-billion disposal of masts and towers business Swiftnet to a consortium led by Actis, concluded in FY2025 – is central to the lower finance costs.

But the headline figure is flattered by what happened in the prior year. FY2025 Heps from continuing operations was depressed by about R568-million in one-off charges: a R451-million after-tax loss from the derecognition of the Telkom retirement fund (91.9c/share) and R117-million in restructuring costs (23.8c/share). Add those 115.7c/share back to the prior-year base, and the underlying Heps improvement narrows to about 16-24% – still impressive, but a long way from the 45-55% headline.

Basic EPS to fall

A second base-effect impact is also muddying the total operations comparison: basic EPS from total operations (continuing and discontinued) is expected to fall between 52 and 56%, from 1 528c in FY2025 to 679.2-735.8c in FY2026. That’s as a result of the Swiftnet disposal gain, which was recognised as a discontinued operation in the prior year and is now fully unwound.