Telkom has significantly increased its dividend payout to its shareholders in its year to March 31 after another year of strong operational performance and earnings growth.
Image: Tracey Adams/Independent Newspapers
Telkom lifted its dividend a sector-beating 65.7%, to 270 cents per share, for the year to March 31 after reporting another 12 months of strong earnings growth and healthy cash flows in the third year of its transformation strategy.
Telkom Group CEO Serame Taukobong on Tuesday said the increased dividend was the result of a strong financial performance over the year and the raising of the dividend payout policy range to 40% to 60% of free cash flow, up from the previous 30% to 40%.
The dividend increase beats Vodacom’s 18.5% rise in total dividend for the year to March 31, and it also beats MTN’s 42.9% rise in dividend to 500 cents per share for its 2025 financial year.
Telkom’s group data revenue increased by 7.6% to R26.6 billion. Group revenue increased by 1.4% to R44.5bn. Earnings before interest, tax, depreciation, and amortisation (EBITDA) was up by 5.8% to R12.5bn. Free cash flow of R3.07bn was 10.4% higher. Headline earnings per share of 708,5 cents have increased by 21.5%.
Data revenue now contributes 59.8% to group revenue, up from 56.4% in the prior year, indicating the shift in the revenue mix towards mobile and fibre.
The EBITDA margin expanded by 1.2 percentage points to 28.1%, tracking above the group’s medium-term guidance range of 25% to 27%.
The margin improvement reflects cost management initiatives that drove a 1.1% decline in total costs, and an improvement in the cost-to-income ratio to 73%.
The increase in free cash flow was supported by improved collections, cost efficiencies, and disciplined cash management. Net debt fell by 14.7% to R6.37bn.
Taukobong said the results validate their strategy for Telkom’s transformation as the group positions itself for consistent quality earnings that allow for enhanced shareholder returns.
“We are now in the most demanding phase of the transformation strategy on which we embarked three years ago,” Taukobong said.
He said a unique ecosystem had been built that leverages the strengths of subsidiary Openserve’s fibre network and Mobile’s consumer reach to drive growth.
“Combining these value propositions with the power of IT services and solutions in BCX enables us to support small and medium enterprises, and government, with competitive differentiated propositions for future growth,” he said.
Telkom Consumer gained market share during the past year through the execution of the data-led, pre-paid-driven strategy.
The Mobile business surpassed 25 million subscribers and sustained market-leading service revenue growth for the 14th consecutive quarter, in its 15-year anniversary.
Mobile service revenue increased by 6.8% to R22.39bn, with pre-paid service revenue growing by 10.3% to R15.39bn.
The regional strategy delivered double-digit revenue growth from non-metro areas, reflecting an increase in the share of acquisitions in under-penetrated regions.
Mobile data subscribers grew by 31.1% to almost 20 million, now representing 77.8% of the total subscriber base.
Mobile data revenue increased by 10.5% to R17.75bn, driven by mobile data traffic growth of 18.5% to 2,084 petabytes.
Fibre revenue increased by 10.3%, supported by 8.7% subscriber growth and average revenue per user expansion.
The Mobile business delivered a 14% increase in EBITDA. At the business unit level, Consumer increased EBITDA by 20.8% to R6.73bn.
Openserve saw full-year overall revenue growth for the first time in nine financial years, an indication that the transition to fibre services was largely complete.
Its overall revenue grew by 2.3% to R12.63bn, with fibre-related data revenue rising by 8.1% to R10.11bn. External revenue increased by 10.7%. Enterprise revenue grew by 9.7%, carrier services by 3.6%, and broadband revenue by 6.9%.
EBITDA increased by 5.6% to R4.23bn. Openserve continued to drive fibre deployment, with homes connected growing by 17.7% to 817,540.
BCX revenue fell by 7.6% to R11.41bn, with the decline driven primarily by the Converged Communications business as the deliberate migration to fibre platforms continued.
The IT business revenue was stable, with Cybersecurity services revenue growing by 21.1% and IT hardware and software revenue rising by 5.6%.
Capital expenditure increased by 10.4% to R6.43bn, with investment directed primarily at mobile and fibre infrastructure to enhance competitiveness, improve customer experience, and support future growth.
“Our data-led strategy remains our key growth driver. We will balance growth investment and cost discipline in the coming year,” Taukobong said.
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