One state-owned entity sold a big stake in Telkom and lost out on millions

The Public Investment Corporation (PIC) significantly reduced its stake in Telkom over the last year and therefore lost out on millions in share price gains.

Telkom released its financial results for the year ended 31 March 2025, which showed an improved performance across many metrics.

Group revenue increased 3.3% to R43.9 billion, and earnings before interest, taxes, depreciation, and amortisation (EBITDA) jumped 25.1% to R11.8 billion.

Telkom’s free cash flow rose 555.2% to R2.8 billion, and adjusted headline earnings per share (HEPS) increased 102.4% to 583.2 cents.

Adjusted profit for the year for continuing operations increased by 130.5% to R3.4 billion, and Telkom reinstated its dividend.

Openserve’s fibre division continued to perform well. Fibre data revenue increased by 5.9%, driven by a 13.3% increase in homes passed to 1.38 million and a 50.4% connectivity rate.

Openserve is South Africa’s leading wholesale infrastructure connectivity provider and the country’s largest open-access network.

Telkom Consumer increased operating revenue by 5.6% to R27.8 billion, primarily due to the mobile business’s strong performance.

External revenue from the mobile business reached R24.4 billion, an 8.3% increase, driven by 10.2% growth in mobile service revenue to R21 billion.

Telkom CEO Serame Taukobong said that in 2023, they embarked on a strategy to serve as the backbone of South Africa’s digital future.

They reshaped the business to capitalise on its strengths and set clear goals and key performance indicators for the group and its operating divisions.

“Today, our 2025 full-year results demonstrate that the competent execution of our data-led strategy is meeting and, in some cases, exceeding expectations,” he said.

Many analysts shared Taukobong’s view that Telkom is a good investment with better prospects than a few years ago.

Piet Viljoen, a portfolio manager and executive director at Merchant West Investments, said Telkom is the kind of stock value investors dream about.

It is unpopular, under-owned, asset-rich, and cash generative. It also has highly valued comparable assets owned by credible players.

The market agrees with this assessment. The Telkom share price increased by 76% over the last year, showing investor confidence in the company.

The Public Investment Corporation sold a large stake in Telkom

Telkom’s latest financial results showed that the Public Investment Corporation (PIC) sold a significant part of its Telkom stake.

The PIC is an asset management firm wholly owned by the government of the Republic of South Africa, represented by the Minister of Finance.

For decades, the South African government has been the largest shareholder in Telkom. This continued despite its listing on the JSE in 2003.

In March 2024, the government held 40.5% of Telkom directly and 15.89% indirectly through the PIC.

Although the 15.89% PIC shareholding belongs to the PIC’s beneficiaries, namely state employees and retirees, it holds the proxy voting rights on those shares.

This means the South African Government has complete voting control on the PIC’s shares, thereby giving the South African government a 56.4% controlling share in Telkom.

On 23 August 2024, Telkom announced that the PIC had disposed of a significant portion of its Telkom Shares.

In its most recent annual financial statements, Telkom reported that the PIC now only owns 8.44% of the Telkom Group. This means that the PIC disposed of roughly 7.45% of its stake.

At the date of the announcement, the value of the PIC’s disposed Telkom shares was worth around R983 million.

Ever since the PIC disposed of the Telkom shares, Telkom’s share price increased by 61% from R26.94 to R43.47.

This means the PIC’s disposed shareholding would have been worth R1.6 billion using the current share price.

The beneficiaries of the PIC’s Telkom shares, state employees and retirees, have therefore missed out on R606 million in Telkom share price increases.

In its March 2025 financial statements, Telkom reported that the South African Government still currently holds 40.50% in Telkom, and the PIC holds 8.44%.