The South African telecoms company that swung from a R10-billion loss to a profit in one year

Partially state-owned telecoms operator Telkom saw its finances swing by R11.85 billion from a R9.97 billion loss in 2022/23 to a R1.88-billion profit in 2023/24.

This is according to the National Government platform’s historical financial data for state-owned enterprises.

Telkom is described as a partially state-owned enterprise. The South African government is currently its majority shareholder, with a 40.5% stake in the company.

At the same time, the Public Investment Corporation (PIC), which is also government-owned, holds a 10.9% share, bringing the government’s total stake to nearly 51.4%.

The PIC held a 13.4% stake in the company until August 2024, when it sold 26% of its Telkom holdings.

While Telkom was only officially established in 1991, its roots date much further back.

Early telecoms in South Africa were managed under the Department of Posts and Telecommunications, a government department responsible for postal and telephonic services.

However, by the late 1980s, the government saw the need to modernise and commercialise the country’s telecoms services.

Telkom SA Ltd was established in 1991 and took over management of telecommunications functions in South Africa. At the time, its mandate was to provide fixed-line voice and data services nationwide.

The telecoms company’s partial privatisation was initiated in 1997, when a 30% stake was sold to a consortium called Thintana Communications.

Thintana was formed through a joint venture between the United States’ SBC Communications and Telekom Malaysia.

SBC Communications held 60% of Thintana, while Telekom Malaysia had a 40% stake. Government said the deal brought international expertise and funding to modernise Telkom.

The South African government held onto its remaining 70% stake in the company until Telkom’s listing on the Johannesburg Stock Exchange (JSE) in March 2003.

Public investors acquired a roughly 25% stake in Telkom through the listing, while government’s stake was reduced to 38.4%.

Thintana’s share decreased to 15.1% in 2004, before exiting entirely in 2005, when Telekom Malaysia sold its remaining stake in the company.

Telkom’s current shareholding breakdown is as follows:

• South African Government: 40.5%
• Institutional stakeholders (including PIC): 44.6%
• Non-institutional stakeholders: 9.4%
• Telkom Treasury: 5.5%

Due to its ownership structure, Telkom is considered a partially state-owned company. Although it also operates as a listed commercial enterprise.

Telkom financial reporting: 2019/20 to 2023/24

Telkom’s annual financial results show that the company swung from a R9.97 billion loss in 2022/23 to a R1.88 billion profit in 2023/24 — a difference of around R11.85 billion in net profit.

This was despite it reporting a lower total revenue of R44.01 billion in 2023/24, down from R47.68 billion in 2022/23.

However, Telkom’s total expenditure, including its staff-related costs, was significantly lower in 2023/24 at R42.14 billion, compared to R57.65 billion in 2022/23.

According to Telkom’s annual report for 2022/23, its operating expenditure increased significantly due to accelerated load-shedding during the period and an average group-wide salary increase of 6.0% from 1 April 2022.

In its 2023/24 annual results, it noted that some of its expenses had decreased markedly compared to the year prior.

“Other expenses decreased by 12.9% to R2,195 million, mainly due to lower third-party costs and the containment of discretionary spend,” said Telkom.

“Depreciation, amortisation, impairments and write-offs decreased by 27.2% to 5,561 million, mainly due to the impairment of assets in the previous financial year.”

It was also noted that employee expenses decreased 4.0% in the 2023/24 financial year due to a 15.0% headcount reduction during the period.

This was combined with no salary increases for management positions and an average 5.0% increase for bargaining unit employees, which only took effect in the third quarter of the year.

This is evident in its staff-related cost figures for the two financial years, with the figure dropping from R9.29 billion in 2022/23 to R7.90 billion in 2023/24.

Telkom recently announced that it expects to have more good news this year. It notified investors through the JSE News Service on Monday that it expects to report 290% to 300% higher basic earnings per share.

Much of the increased earnings was due to the estimated R4.3 billion after-tax profit made on the disposal of Swiftnet.

Even excluding the Swiftnet sale and including the cost of converting the Telkom Retirement Fund to a defined contribution fund, Telkom said it expects to report 40% to 50% higher headline earnings per share.

The table below summarises Telkom’s annual revenue, expenditure, and profit or loss for the financial years spanning 2019/20 to 2023/24.

Telkom expects to report its results for the 2024/25 financial year on 10 June 2025.