Telkom declares first dividend in five years after debt plunge

By Chris Spillane
Photo credit: Blyzz / Foter / CC BY-ND
Photo credit: Blyzz / Foter / CC BY-ND

(Bloomberg) — Telkom SA SOC Ltd., South Africa’s biggest landline provider, said it would pay its first dividend since 2011 after cutting debt by 92 percent, even as full-year profit fell on lower voice revenue.

The company will pay a combined ordinary and special dividend of 2.45 rand ($0.19) per share after debt declined to 151 million rand, the Pretoria-based company said in a statement on Monday. Net income was 3.3 billion rand in the 12 months through March, down from 3.9 billion rand a year earlier, while fixed-line voice revenue fell 14 percent to 6.9 billion rand.

“Our healthy financial position will not only allow us to take advantage of any promising opportunities that could come our way, it has also made it possible for us to pay a dividend this year,” Chief Executive Officer Sipho Maseko said in the statement.

Telkom is cutting jobs to reduce costs as consumers switch to data-enabled smartphones and tablets from landlines. The company is also trying to increase profit at its mobile service, South Africa’s fourth-biggest, and boost sales of its Internet offering.

“We expect the challenging operating environment of the year under review to prevail in the year ahead, compounded by increasing competitive pressures and regulatory interventions,” Maseko said. “We are reviewing our current operating model.”

Telkom shares gained 0.7 percent on Friday to 65.98 rand, valuing the company at 34.5 billion rand. The stock is down 5.7 percent this year. The South African government has a stake of about 40 percent in the phone company.

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