Profits in South Africa's Telkom climb in H1

PUBLISHED: Tue, 15 Nov 2016 08:59:22 GMT

Telkom SA, South Africa’s biggest fixed-line phone company, said on Tuesday its half-year profit rose 19.7 percent, buoyed by its mobile business and the consolidation of its enterprise division. 

Headline earnings per share (HEPS) for the six months to the end of September rose to 336 cents from 280.6 cents a year earlier. Headline earnings are the main profit gauge in South Africa and exclude certain one-off and non-trading items.

Telkom, which is 40 percent government owned, has been struggling to boost its mobile business to offset the falling use of landlines. In 2015 it walked away from an acquisition of Cell C after the firms failed to agree on a price.

The company, which launched its mobile phone business five years ago, said the mobile division contributed positively to core profit (earnings before interest, tax, depreciation and amortisation) for the first time.

Shares in the company jumped as much as 7 percent in early trade and were up 3.8 percent at 62 rand by 0730 GMT.

Operating revenue jumped 20.6 percent to 20.2 billion rand($1.4 billion) while net operating revenue was up 3.3 percent.

“The consolidation of Business Connexion, as well as the satisfactory performance of the company’s mobile business, drove revenue performance during the six months,” Chief Executive Officer Sipho Maseko said in a statement.

Telkom merged its business division with IT firm Business Connexion (BCX), which it acquired last year.

Mobile data revenue increased 43.2 percent to 1.01 billion rand from 711 million rand in 2015. Mobile voice and subscriber revenue rose 30 percent to 520 million rand from 400 million rand while active mobile users climbed 42 percent. Fixed-line voice usage and subscription revenue fell 4 percent.

“Our mobile business has been able to establish itself as a meaningful player in the market. We intend growing our scale in the mobile market through focusing on the post-paid and data market in which we are already making inroads,” said Maseko.

Telkom had a complete overhaul of its mobile services in the form of FreeMe, which includes free text messages and free phone calls to any network, the launch of new stores and lower prices for data.

The company declared an interim dividend of 131 cents per share.

($1 = 14.3059 rand)

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