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Johannesburg - Telkom’s growing share price justifies why government shouldn’t sell its stake in the company, said Telecommunications and Postal Services Minister Siyabonga Cwele.
Telkom’s share price in Johannesburg soared around 10% on Monday amid the company’s annual financial results announcement.
The company reported that its earnings before interest, tax and amortisation (Ebita) was up by 16.1% and that its operational revenue increased 13.9% to R37.3bn.
The company, though, recorded an after tax profit fall of 25.4% following its application of severance packages.
But amid Telkom cutting almost 4 000 jobs during the period, the market reacted positively.
And government, which is Telkom’s biggest shareholder with an almost 40% stake, is pleased with the telecoms company whose share price opened at R64.50 in trade on Tuesday.
“We welcome that Telkom has performed steadily over the past four years, especially given that there were suggestions that it be sold,” said Cwele in a statement.
“The current share price is a demonstration of the correctness of government’s decision to keep its investment in the company.
“The board and management team have done well to change the fortunes of Telkom in this period. But, more work still needs to be done,” added Cwele.
Telkom on Monday further announced that it will pay a dividend of R2.70 a share, up 10% on the previous year.
“We are happy that once again we will get a substantial dividend from Telkom. While we know that the dividend will go into the National Revenue Fund, it is our view that we should start to re-invest a substantial amount in the rollout of modern ICT infrastructure,” said Cwele.
