Telkom Reports 201% Surge in Earnings, Revenue Up 1.6%

  • Telkom's 2024 fiscal year shows 201% HEPS growth, reaching 376.0 cents per share.
  • Company's revenue climbs 1.6% to R43,230 million despite economic challenges.
  • Strategic investments in network resilience and digital infrastructure pave the way for future growth.

Telkom SA SOC Ltd (JSE: TKG) has announced its Group Annual Results for the fiscal year ending March 31, 2024. The company reported robust financial and operational performance despite facing a challenging economic environment.

Key Financial Highlights

  • Mobile Service Revenue: Up 6.8% to R19,026 million.
  • Group Revenue: Increased by 1.6% to R43,230 million.
  • Next-Generation Revenue: Grew by 7.0% to R34,356 million.
  • Fibre Connectivity Revenue: Up 14.5% to R5,633 million.
  • Group EBITDA: Rose by 5.2%, with an EBITDA margin of 23.2%.
  • Headline Earnings per Share (HEPS): Soared by 201.3% to 376.0 cents.
  • Basic Earnings per Share (BEPS): Increased by 442.8% to 385.5 cents.
  • Free Cash Flow: Improved by 115.6% to R424 million.

Operational Achievements

Telkom’s data-driven strategy has yielded significant results, including a 6.8% increase in mobile service revenue and a milestone of over 20 million mobile subscribers. Openserve, Telkom’s fibre division, has advanced its fibre connectivity rate to 48.5%, passing over 1.2 million homes. BCX, another subsidiary, saw growth in IT service revenue, while Swiftnet’s tower rollout and tenant growth contributed to the overall revenue increase.

The company invested R6.1 billion to enhance network resilience, expand its mobile network, modernize fixed network infrastructure, and bolster ICT managed services capabilities. This investment includes spectrum deployment to improve offerings and service levels across retail, enterprise, and wholesale markets.

Strategic Moves

Telkom has made strides in its strategic goal to unlock value through the proposed sale of Swiftnet for R6.75 billion, which was approved by shareholders on May 24, 2024. This move is expected to open further opportunities for shareholder value enhancement.

Challenges and Resilience

Despite inflationary pressures and power outages in South Africa, Telkom managed to deliver a 5.2% growth in normalized EBITDA, reaching R10.0 billion. This growth was partly driven by the non-recurrence of previous restructuring costs and lower depreciation rates.

Segment Performance

  • Openserve: Increased external channel revenue by 10.7% to R4,526 million, with next-generation fibre connectivity now accounting for over 93% of its external wholesale revenue.
  • Telkom Consumer: Delivered high-speed broadband solutions, increasing external revenue by 2.2% to R26,140 million.
  • BCX: Despite a 2.3% revenue decline to R12,915 million, IT revenue increased by 9.9% to R7,262 million.
  • Swiftnet: Revenue grew by 1.3% to R1,321 million, with a 10.4% increase in EBITDA to R990 million.

Leadership and Future Outlook

Telkom welcomed Nonkululeko Dlamini as the new Group Chief Financial Officer in December 2023 and appointed Sello Mmakau as Group Chief Digital Officer in April 2024. These leadership changes aim to drive Telkom’s digital transformation and enhance customer service.

Looking ahead, Telkom plans to invest in growth areas such as its mobile and fibre networks and expand its ICT capabilities, particularly in data centers and IT managed services. The company’s revised dividend policy, targeting a payout range of 30% to 40% of free cash flow, reflects its commitment to returning value to shareholders.