Telkom issues record dividend

Telkom raised the full-year dividend by a record as SA’s biggest landline provider enters a new phase of growth by giving more autonomy to its four business units.

The annual payout to shareholders increased 56% to R4.22 a share, the Pretoria-based company said yesterday. Earnings per share, excluding one-time items, increased by 12% to R7.31 in the year to March, while operating revenue gained 9.8%.

“We have provided more clarity on our dividend in that we will pay shareholders 60% of headline earnings,” chief executive officer Sipho Maseko said. The integration of 2015 acquisition BCX into the business-to-business division and the accelerated growth of the mobile-phone unit helped drive the earnings increase, the CEO said.

Following a three-year turnaround strategy that returned Telkom to profit, Maseko is giving business units more independence to boost earnings. The phone operator, almost 40% owned by the government, started a mobile unit.

BCX, which provides IT services to corporate customers, a real estate portfolio and wholesale broadband, make up the other three units.

Telkom shares rose 2.3% to R77.74 yesterday morning, soaring more than 400% under Maseko. That values the company at R41 billion ($3.2 billion).

The phone operator has done smaller acquisitions to build out the BCX business, adding customers in industries including retail, health and mining. The broadband business will enable fixed line and mobile customers to stream video and the company has content-sharing partnerships with Netflix and Multichoice.

Capital expenditure increased 43% to R8.7 billion as the company invested in fibre networks and the wireless business. Mobile subscriber numbers rose by 48% to about 4 million. – Bloomberg

We have provided more clarity on our dividend in that we will pay shareholders 60% of headline earnings.

Sipho Maseko Chief executive officer