South Africa’s Telkom half-year profit jumps on lower depreciation cost

JOHANNESBURG (Reuters) – South Africa’s third-biggest telecom company Telkom on Tuesday reported a 46.7% jump in half-year profit, boosted by lower depreciation charges and growth in core profit.

Telkom, majority-owned by the government, said its headline earnings per share, a profit measure, rose to 1.95 rand in the six months ended Sept. 30 from a restated profit of 1.33 rand.

Group revenue grew 2.5% to 21.8 billion rand ($1.19 billion), driven by growth in mobile traffic, monetising fibre rollouts, and growth of the IT business, Telkom said.

Telkom also saw good growth in mobile service revenue, driven by value-compelling propositions, with total external revenue from mobile operations rising 4.1% to 11 billion rand.

“Next-generation” revenue growth in its fibre business, Openserve was at 6.9%, due to the growth in fixed data revenue.

Telkom has been investing in migrating customers away from copper-based technology to faster technologies such as fibre and LTE as customers seek faster internet for richer content.

Telkom said its cost-reduction initiatives partially offset inflationary pressures and resulted in operating expenses increasing 2.4%, adding its profit was also boosted by lower depreciation charges, without giving additional details.

Despite the higher operating expenses, however, group earnings before interest, tax, depreciation and amortization grew by 1.7% to 5 billion rand, Telkom said.

($1 = 18.3689 rand)

(Reporting by Nqobile Dludla; Editing by Muralikumar Anantharaman and Varun H K)