Shot in the arm for Telkom

Telkom expects its basic earnings to grow by between 5% and 15%, while its headline earnings could decrease by 5%.

Telkom released a trading statement for the six months through September 2024 today as the telecoms giant prepares its interim results for the first half of its 2025 financial year.

Telkom expects its basic earnings per share for the six months to grow by between 5% and 15% compared to the previous year.

This would bring the company’s basic earnings per share to between 210.2 cents per share and 230.2 cents.

Therefore, its basic earnings would be an estimated R1.03 billion on the lower end or R1.13 billion on the higher end.

The company’s headline earnings per share are expected to decrease by at most 5% or increase by up to 5%. This would bring its headline earnings to between 185.2 cents per share and 204.8 cents per share.

However, when looking at Telkom’s adjusted figures, these numbers increase significantly.

Telkom adjusted for the following to reach these figures:

• A R451 million after-tax charge relating to the termination of Telkom’s obligation in terms of the Telkom Retirement Fund (TRF)
• The consequential derecognition of the corresponding funding plan asset recognised under IFRS Accounting Standards
• Restructuring costs

The TRF is a hybrid fund that was started on 1 July 1995 as a defined contribution plan for current employees and a defined benefit plan for retired employees on pension. 

However, recently, the Financial Sector Conduct Authority approved a change to the fund’s rules. This change will convert the fund from a defined benefit fund (for pensioners) to a defined contribution fund (for in-service members). 

This means that the fund will no longer be responsible for paying out specific amounts to retired Telkom employees.

Telkom has clarified that the fund will continue to pay out all pensions, and the rule amendment allows for independent functioning from Telkom as an umbrella fund and opened up for all employees of Telkom.

The company confirmed that the Telkom Retirement Fund, which is responsible for the payment of pensions as an independent umbrella Fund governed by the Pension Funds Act, will continue to pay the pensions of pensioners and not Telkom.

Taking these adjustments into account, Telkom expects its basic earnings per share to grow by between 60% and 70%.

This would bring the company’s basic earnings to R1.57 billion on the lower end and R1.67 billion on the higher end.

Adjusted headline earnings per share are expected to increase by between 50% and 60%.

Below is an overview of Telkom’s expected earnings.