Telkom earnings gain as mobile business makes maiden profit

Telkom SA SOC Ltd. said first-half earnings rose 20 percent as South Africa’s biggest landline provider reported a maiden profit for its faster-growing mobile business.

Earnings per share excluding one-time items were 3.36 rand in the six months through September, the Pretoria-based company said in a statement on Tuesday. That was in the middle of a range forecast by Telkom last month. Earnings before interest, taxes, depreciation and amortization at the mobile unit were 214 million rand ($15 million), compared with a loss of 37 million rand a year earlier.

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

Under Maseko, Telkom is developing its mobile-data service to offset the decline in revenue from landlines. The unit is the country’s fourth biggest, behind Vodacom Group Ltd., MTN Group Ltd., and Cell C Pty Ltd. Telkom, about 39 percent owned by the South African government, has also been reducing costs, and has cut the workforce to just over 12,000 from 21,000 three years ago.

The shares jumped as much as 7 percent in early trade in Johannesburg, the biggest gain since Oct. 27, and traded 4.9 percent higher at 62.62 rand as of 9:11 a.m. The stock has declined 2.6 percent this year, valuing the company at 33 billion rand.

Telkom will pay an interim dividend of 1.31 rand a share, compared with 2.45 rand a year earlier. Operating revenue gained 21 percent to 20.2 billion rand as the company integrated 2015 acquisition Business Connexion.

Capital expenditure increased 56 percent to 3.6 billion rand in the half year as the company invested in connecting fiber networks to homes and the mobile business.