Telkom rises most since 2009 as South African operator cuts jobs

Telkom SA SOC Ltd. shares rose the most in seven years as South Africa’s biggest landline provider reported higher full-year earnings and dividend payment, cut almost 4,000 jobs and embarked on the last financial year of its turnaround plan.

The stock gained 10 percent, on track for the biggest jump since May 2009, to 66.15 rand as of 10:53 a.m. in Johannesburg, set for the highest since Dec. 28. That wiped out share declines this year, valuing the company at 35 billion rand ($2.3 billion).

Earnings before interest, taxes, depreciation and amortization rose 16 percent to 11 billion rand in the year through March, compared with 9.4 billion rand the previous year, the Pretoria-based company said in a statement on Monday. Operating revenue gained 14 percent to 37.3 billion rand. The business offered severance and retirement packages to 3,878 employees during the year, at a cost of 2.2 billion rand.

“Telkom needed to stabilize the business and cut costs and the company has done that,” Ian Brink, an analyst at Arqaam Capital, said by phone. “They have cut staff, but need to grow the business organically going forward. The market hopes to get a clear strategy at the company presentation today.”

Telkom Chief Financial Officer Sipho Maseko has been trying to reduce costs as consumers switch to data-enabled smartphones and tablets from landlines. The company, almost 40 percent owned by the South African government, is also trying to increase profit at its mobile service, South Africa’s fourth-biggest, and boost sales of its internet offering.

“This financial year marks the end of the turnaround phase of our business,” Maseko said in the statement. “Our strong performance demonstrates the sound execution capability we have developed over this turnaround journey and lays a solid foundation for future growth.”

Telkom will pay a dividend of 2.70 rand a share, up 10 percent on the previous year. Net income declined 27 percent to 2.25 billion rand as the company took on one-time payments for cutting employees.

-Bloomberg