When Telkom releases its results for the year to end-March this Tuesday, the headline number will look spectacular. The detail beneath it will be more interesting.
The JSE-listed group flagged in a trading statement last week that headline earnings per share (Heps) from continuing operations will climb 45-55% for the financial year, to between 677.9c and 724.6c, from 467.5c in FY2025. Telkom credited cost discipline, lower finance charges from reduced debt, and the continued payoff from its data-led strategy. On the face of it, that is a striking result. It is also, in part, an accounting mirage.
FY2025’s Heps was depressed by about R568-million in one-off charges – a R451-million after-tax loss on the derecognition of the Telkom retirement fund and R117-million in restructuring costs, together worth 115.7c/share. Add those back to the prior-year base and the underlying improvement narrows to roughly 16-24%. That is still a solid outcome in a tough consumer market, but it is a long way from the number that will be splashed across the news wires on Tuesday morning.
There is a second base effect: basic earnings per share from total operations – continuing and discontinued – is expected to fall by 52-56%, from 1 528c to between 679.2c and 735.8c. That is not a profit collapse: it reflects the unwinding of the gain on the R6.75-billion disposal of masts and towers business Swiftnet to a consortium led by Actis, which was booked as a discontinued operation in the prior year.
So, what should investors and analysts actually be watching for once the full numbers land?
- The dividend: Telkom resumed payouts in June last year after a four-year freeze, declaring an ordinary dividend of R1.63/share topped up with a 98c special dividend funded by the Swiftnet proceeds – R1.3-billion returned to shareholders in all. The question is what the board does with the ordinary dividend, and whether it now spells out a new payout policy with debt falling and free cash flow – R2.8-billion in FY2025 – the strongest it has been in years.
- The mobile engine: Telkom’s mobile business passed 25.3 million subscribers at the end of December, and the consumer business has strung together more than a dozen quarters of category-leading mobile service revenue growth. Watch the full-year subscriber tally, the prepaid and post-paid split, and – crucially – average revenue per user. Prepaid Arpu slipped to R60 in FY2025 as Telkom pushed into lower-spending non-metro markets. That trade-off between volume and value is the number that tells you whether the strategy is still working. Mobile data subscribers, which reached 19.3 million and 76.5% of the base by the third quarter, are the clearest evidence that it is.
- Margins and guidance: Group Ebitda margin hit 29.1% in the third quarter, comfortably above the 25-27% medium-term range management has guided to, and group data revenue now makes up more than 60% of the total. If the full-year margin lands above that band, the obvious question is whether Telkom lifts its guidance – and whether cost discipline and the Openserve fibre backhaul advantage that underpins its mobile economics can keep widening it.
- BCX: The enterprise IT division remains the group’s problem child, with revenue down 9.3% in the third quarter amid constrained corporate spending. Jonas Bogoshi has retired as CEO, with Telkom veteran Hasnain Motlekar acting since 1 March. Expect questions on the turnaround plan, and on whether the unit is a long-term keeper or a candidate for deeper restructuring.
- Openserve and the balance sheet: Openserve, by contrast, has been quietly dependable, passing 1.5 million homes at a connectivity rate above 52% – the highest in the market among the major players – while feeding the mobile network with cheap backhaul. The deleveraging story is central to the lower finance charges Telkom is crediting for the earnings lift, so net debt and interest-cost trends deserve a close look.
- The strategic backdrop: Telkom has spent the year as the unexpected outperformer in South African mobile while Vodacom and MTN wrestled with prepaid weakness at home. Persistent speculation about industry consolidation, including a possible tie-up with MTN, refuses to go away. Any commentary from group CEO Serame Taukobong on consolidation, the government’s shareholding or the medium-term outlook will be watched closely.
The market has already formed a view. Telkom shares closed at R62.12 on Friday, up roughly 45% from the levels around R42 at which they traded when the dividend was reinstated a year ago. Tuesday is unlikely to spring a nasty surprise. The real test lies in the quality of the earnings beneath the headline – and in whether Telkom can convince investors that its run of outperformance still has room to go and that it can keep growing its dividend in the years ahead, despite the difficult operating environment. – © 2026 NewsCentral Media
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