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Tuesday, 18 June 2024 11:36

Telkom's profits bounce back and it hints of dividend return in 2025.

By Nqobile Dludla.

JSE-listed telecommunications company Telkom on Tuesday posted a full-year profit of R1.9-billion and said it would consider resuming dividends from 2025.

The company restated its year-earlier result, a loss after tax of R9.9-billion, reflecting restructuring costs.

Its latest earnings saw write-offs of property, plant and equipment and intangible assets fall to about R80-million from R13.5-billion.

Telkom is also looking to return cash to shareholders after sufficiently funding capex and strengthening its balance sheet. The first year-end dividend payment is targeted for FY2025.

"A revised dividend policy has been approved by the Board. The new policy will be based on available free cash flow while prioritising a strong balance sheet and future capex requirements," said the group.

"The policy proposes a dividend payout range of 30% to 40% of free cash flow after taking into account capex investments. The dividend will be declared and paid on an annual basis, with a resulting dividend yield comparable with local telecommunications companies."

The group's plan to operate as an infrastructure company (InfraCo) is to grow by pooling its assets and capabilities as OneTelkom.

"This will improve returns for the group on our existing and future digital infrastructure. We will invest capex in identified growth areas ahead of time to improve our future operating profit, cash flow and, ultimately, returns on the capital invested."

"With the proposed disposal of Swiftnet, our future areas of growth have been brought into focus as we enter our next phase of monetising Telkom's existing and future digital infrastructure as an InfraCo."

"This will entail efficiently investing in our mobile and fibre network businesses while expanding our ICT capabilities anchored by data centres (own and through partnerships) as a base from which to grow our IT managed services offering.

The group also said that the immediate rollout of 5G and equipment upgrades by MNOs due to migrating 2G and 3G customers to 4G and 5G technologies by the end of 2027 will drive fibre connectivity and rollouts to towers and 5G small cell sites.