Telkom reported on Tuesday a 62.3% rise in full-year earnings and boosted free cash flow, allowing it to resume dividends and sweeten the pay-out with a special dividend after a four-year suspension.
In 2020, the operator of South Africa’s biggest fixed-line network announced the suspension of dividends for the next three financial years starting in 2021 to conserve cash for spectrum auctions and strengthen its financial position.
However, after reaching the initial target, the under-pressure operator delayed resuming dividend payments as it faced challenging market conditions.
“This year’s robust performance and strategic execution allow us to share the fruits of our success with shareholders by distributing both an ordinary and a special dividend. In total, the group will return R1.3-billion to its shareholders,” Telkom said in a statement.
Telkom declared a final dividend of R1.63/share and a special dividend of 98c/share, thanks to proceeds from the disposal of its mast and tower business Swiftnet.
The operator also upgraded its medium-term guidance for revenue growth to mid-single-digit growth from low- to mid-single-digit, betting on its continued industry-leading mobile service revenue growth and fibre connectivity ratio. By 10.49am, Telkom shares surged 7% to R42.81 after rising by 10% at market open.
Revenue climbs
Telkom said its headline earnings per share for continuing operations rose to 467.5c in the year ended 31 March. Revenue increased by 3.3% to R43.8-billion, surpassing expectations due to strong growth in mobile service revenue, which rose 10.2%, and fibre-related data revenue, up 10%. Analysts surveyed by LSEG had forecasted revenue of R43.5-billion.
“They are gaining share in the mobile market … and their peers are growing between 2% and 3% here, and therefore what we’re seeing is substantial market share gains from Telkom from their data and strategy,” SBG analyst Nadim Mohamed said.
Its free cash flow improved to R2.8-billion from R424-million, driven by cost-optimisation initiatives, improvement in revenue and disposal programme.
Read: Telkom shares at two-year high amid ‘growing momentum’
“Cash generation is the strongest Telkom has seen in a long time. They also had large asset disposals over the period and those have also helped reduce debt on the balance sheet,” said Peter Takaendesa, chief investment officer at Mergence Investment Managers. — (c) 2025 Reuters
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