Telkom bouncing back

Telkom reported strong interim results with an impressive uptick in free cash flow as the telecoms giant cut back on capital expenditures.

Telkom released its results for the six months through September 2024 on Monday, which revealed a strong performance for the first half of its 2025 financial year.

The company’s earnings per share from total operations grew by 8.7% to 217.6 cents per share. Headline earnings per share decreased slightly by 1.8% to 191.5 cents per share.

It should be noted that, when looking at Telkom’s adjusted earnings, these figures change drastically.

Telkom CEO Serame Taukobong explained that the company’s earnings were impacted by a R451 million after-tax adjustment emanating from converting the Telkom Retirement Fund to a defined contribution plan following a recent rule amendment from the Financial Sector Conduct Authority.

In addition, restructuring costs of R160 million were also provided for during the period. 

“Given these non-recurring items, we believe that adjusted figures provide the most accurate representation of our true performance and align with how Telkom is managed,” he explained.

Telkom’s adjusted earnings per share grew by 66.5% to 333.3 cents, while adjusted headline earnings per share grew by 57.5% to 307.2 cents.

The company’s revenue from continued operations – which excludes its soon-to-be-sold Swiftnet business –grew by 1.9% to R21.38 billion.

This growth was driven by mobile service revenue, which contributed R10.22 billion to the total and grew by 10% in the six-month period.

Fibre date service revenue also grew significantly by 15.5% and contributed R3.65 billion to the total.

“Our next-generation broadband offerings, enabled by ongoing capital investment in our networks, have positioned Telkom as the best-value mobile network in South Africa,” Taukobong said. 

“In line with our connect-led strategy for our fibre assets, we maintained a high market-leading home connection rate of 49.7% for the period.”

Telkom’s profit from continuing operations for the period grew by 8.2% to R853 million. When adjusted, profit grew by 80.3% to R1.42 billion.

One standout figure from Telkom’s interim results is its free cash flow from continuing operations, which grew by 260.7%  to R768 million. 

This is a significant jump, as Telkom’s free cash flow was in the red in its 2024 interim results.

The company attributed this growth to the R1.05 billion restructuring cost paid in the prior period, an 11.7% increase in cash generated from operations, and a significant decrease in capex spent.

Telkom’s capex for the period dropped by 17.9% to R2.54 billion, down from R3.10 billion in Hi 2024.

The company also attributed its higher free cash flow to lower tax paid and cash inflow in relation to the Google transaction, partly offset by an increase in lease payments.

“Underlying operational performance improved, driven jointly by revenue growth and internal cost optimisation initiatives,” the CEO said.

“We made substantial progress during the period as we advanced data-led revenues and harnessed gains from cost optimisation initiatives, with a resultant adjusted Group EBITDA growing ahead of group revenue.”

Telkom’s EBITDA grew by 1.9% to R4.83 billion, while adjusted EBITDA increased by 18.3% to R5.61 billion.

“Looking ahead, the strength of our balance sheet remains a top priority, ensuring that we stand resilient in the face of challenges,” the company said. 

“We will endeavour to maintain into the second half of the year the good momentum we have experienced so far, which is pointing towards a sustained trend of positive free cash flow.”

Telkom did not declare an interim dividend.