Telecommunications operator Telkom has increased its full-year dividend by 16%, from 125c/share to 145c/share, despite turning in disappointing financial results in the 12 months to 31 March 2011.
“The ordinary dividend has been calculated with reference to Telkom’s current and expected future debt and cash flow levels,” the group says. The 2011 dividend will be paid to shareholders on 11 July.
The hike in the dividend comes in spite of a fall in Telkom’s revenues and earnings in the 2011 financial year. Normalised operating revenue slid 5,2% to R33,4bn, with normalised headline earnings per share from continuing operations (that excludes the company’s troubled Nigerian subsidiary, Multi-Links) falling by 35,2% to 444,9c.
Telkom CEO Nombulelo Moholi says trading conditions have proved “tough” as a result of intensifying competition, pricing pressures and regulatory intervention. “The declines seen in our traditional fixed-line voice revenue are set to continue,” she says.
Cuts in wholesale call termination rates — the fees operators charge each other to carry calls between their networks — have also negatively affected Telkom’s results.
The only real bright spot in the group’s numbers is the continued growth in broadband and data services. Data revenue grew 7,7% to R10,7bn. Moholi describes this as a “good achievement given the muted economic conditions and intensifying competition”.
Capital expenditure at Telkom SA, the group’s principal subsidiary, fell by 27,2% in the year to March to R2,8bn. “Capex into the future will be aimed at growing our ability to service enterprise (large business) customers and other value clusters and providing far superior broadband speeds,” Moholi says. “It’s about increased capacity and connectivity.” — Duncan McLeod, TechCentral