Shares in listed telecoms group Telkom surged 7% on Tuesday (18 May), following a trading statement pointing to significant growth in earnings for the year ended March 2021.
Telkom said headline earnings per share (HEPS) is expected to increase by 145% to 155% for the year, while reported basic earnings per share (BEPS) is expected to increase by 300% to 310% compared to the prior year ended March 2020.
This is mainly due to the significant growth in group EBITDA of approximately 20% compared to the prior year, and a reduction in the reported effective tax rate from 37.6% to 30.5% in the current year.
The projected growth in headline earnings translates to 301.8 to 322.6 cents per share higher than 2020 – ie, projected earnings of 509.9 to 530.7 cents per share.
Telkom said that the strong performance includes the impact of voluntary severance packages, voluntary early retirement and section 189 retrenchment packages of R270 million and the related tax impact of R76 million in the current year.
The group said it also achieved strong underlying performance with solid growth in underlying operating profit. This was driven by strong growth in underlying group EBITDA compared to the prior year, which was underpinned by a “robust performance” in the mobile business and effective and sustainable cost management.
Notably, Telkom said its mobile business continued to grow service revenue, while the overall sustainable cost management program outperformed management’s expectations.
Shares in Telkom climbed over 7% in mid-day trade on the JSE.
The group will publish its annual results on 24 May 2021.
Read: Telkom sees strong mobile subscriber growth