Telkom is a stock value investors dream about

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

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

The company has already rewarded patient shareholders with a strong return over the last year, and there may be more to come.

Viljoen’s comments followed Telkom’s financial results for the year ended 31 March 2025, which investors viewed as overwhelmingly positive.

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

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

Particularly good news for investors was that Telkom reinstated its dividend, signalling a renewed focus on delivering value to shareholders.

Telkom will return a total dividend of 261 cents per share, including an ordinary cash dividend of 163 cents per share and a special dividend of 98 cents per share from the Swiftnet sale.

Telkom CEO Serame Taukobong said the company has modernised its technology infrastructure and executed on a detailed strategy across its operations.

“The financial results for the 2025 financial year confirm that the business has stabilised and has built a platform for accelerated growth,” he said.

Telkom is heavily focused on its mobile and data products, which have both shown a strong performance over the last year.

Mobile subscribers grew by 13.4% to 23.2 million, and fibre data revenue surged by 15.5%, driven by a 3.4% increase in subscribers and a 12.4% uplift in average revenue per user (ARPU).

Taukobong said Telkom established a solid foundation from which to grow, leveraging its mobile and fixed networks, as well as its ICT capabilities.

The strategic medium-term objectives include an EBITDA margin of between 25% and 27%, supported by mid-single-digit top-line revenue growth.

Telkom expects to contain capital expenditure to 12% and 15% of revenue and ensure a strong balance sheet with a net debt to EBITDA ratio of 0.5x to 1.5x.

Analyst opinions about investing in Telkom

Zwelakhe Mnguni from Benguela Global Fund Managers said Telkom’s share price has increased significantly over the last year, and that he would wait for a pull-back before buying.

However, he said Telkom’s turnaround has shown positive signs and that the management team has delivered results which were well ahead of market expectations.

“The better-than-expected results have given Telkom a re-rating which is much better than what it was in the past,” he said.

Ricus Reeders from PSG Hole in One Ruimsig said Telkom had a strong run and has hit its technical target of R45 per share.

He added that the South African telecommunications sector is performing well, which has helped the share prices of companies like Telkom, MTN, and Vodacom.

He concurred with Mnguni that a pullback from the current levels will provide a buying opportunity for investors.

Despite the strong results and the upbeat market reaction, not everyone is optimistic about Telkom’s prospects.

Graeme Körner from Körner Perspective said Telkom’s decision to sell its tower infrastructure company, Swiftnet, raises questions about its long-term strategy.

He said Telkom should get credit for driving performance over the last year. However, the telecommunications industry in South Africa faces challenges.

“Telecommunications in South Africa is overtraded and there is a lot of competition in voice and data,” he said.

Körner argued that the long-term prognosis for voice and data in South Africa and the rest of Africa is not great.

Although telecommunications providers are exploring new revenue streams, such as fintech, it is challenging to replace traditional voice and data revenue.

Telkom Group Revenue

Telkom Group Net Income

Telkom Group EBITDA

Telkom Group Share Price