Telkom profit surges to R7 billion

Telkom has returned to paying dividends after the group declared over R7 billion in profit, including a special dividend following the sale of Swiftnet.

Serame Taukobong, Telkom’s Group CEO, said the company’s strategic vision is yielding exceptional results.

The group also completed the sale of its tower business, Swiftnet, to a consortium of buyers for R6.5 billion during the financial year. 

Although the group data revenue remained strong, a combination of successful strategies fuelled the increase in EBITDA and cash flow growth.

Mobile and fibre service revenue growth across the group improved adjusted EBITDA by 25.1% and drove a 19.3% year-on-year increase in cash flow from underlying operations.

With total profit income for the year growing from R1.8 billion to R7.5 billion, Telkom reinstated dividend payments after a five-year suspension.

The group’s new dividend policy aims to maintain a strong balance sheet, buffer potential economic downturns and fund future capital investments.

The board declared a final ordinary dividend of 163 cents per share for the year and a special dividend of 98 cents per ordinary share.

The ordinary dividend was declared out of the cash balances, and the special dividend was declared out of the cash proceeds from the Swiftnet disposal.

This took the total dividend for FY2025 to 261 cents per share, with Telkom returning R1.3 billion to its shareholders. 

The group suspended the payment of dividends for three years to conserve cash and buy much-needed spectrum in 2020, but required another two years before paying out.

Outlook

The group has set several objectives for the next three years using its current momentum, which it says will be achievable.

Maintaining a strong balance sheet remains a top priority, as this will enable it to invest in profitable growth without compromising its resilience, it said.

Telkom also hopes to sustain the positive free cash flow momentum that has been established to date.

The group’s medium-term objectives are:

• Margin optimisation: The group wants to improve EBITDA margins for ongoing operations, ranging between 25% and 27%.
• Revenue acceleration: It wants revenue growth across all businesses to exceed inflation, currently projecting annual revenue growth in the mid-single digits.
• Strategic capital allocation: Telkom wants to maintain capital expenditure for future growth within a range of 12% to 15% of revenue.
• Balance sheet strength: The company wants to preserve a robust balance sheet with a net debt to EBITDA ratio between 0.5x and 1.5x.

“We will continue to navigate global macro-economic uncertainties and domestic challenges like high unemployment and the need for sustained economic growth to support our connectivity businesses,” it said.

“At the same time, we are encouraged by positive signals in South Africa, including moderating inflation and marginally lower interest rates.”