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Telkom cuts dividend as earnings slump amid push into mobile

Telkom [JSE:TKG] cut its dividend and reported a decline in full-year earnings as South Africa’s biggest provider of fixed phone lines struggles with a decline in its traditional voice services.

The Pretoria-based company reduced the annual payout to shareholders by 16% to R3.55 a share, it said in a statement on Monday.

Earnings before interest, taxes, depreciation and amortisation for the year ended March 31 fell 3.6% to R10.5bn.

The phone carrier plans further cutbacks in its BCX business, which provides internet and voice services to public and private customers, this year as chief executive officer Sipho Maseko seeks new sources of earnings.

Telkom, 40% owned by South Africa, had lost almost one-third of its value over the past year amid political uncertainty and speculation that the government will reduce its stake.

“Telkom is shifting towards new revenue streams, such as mobile, data and the internet of things,” Maseko said in an interview.

Telkom fell 5% to R50.97 a share at 16:25 in Johannesburg.

While BCX employs 9 000 people, Maseko said the company will reassess the numbers in September, when conditions not to cut more than 20 jobs set by the Competition Commission come to an end.

The carrier reported a 47% increase in service revenue from mobile customers to R5.15bn. Telkom started its mobile unit - the country’s fourth-biggest - with just over 5 million subscribers, to bolster its service offering to consumers.

Intentions from the government to sell its stake in Telkom first came to light late last year when the country was trying to side-step a ratings downgrade.

“I don’t think we are high up on their chopping board anymore, although government would have to speak for itself,” said Maseko.

“We had a meeting with the president yesterday morning, and that’s what we can deduce so far.”

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