Telkom’s Big Comeback: How a State Backed Giant Turned a Profit and Won Back Investors

From the brink of investor fatigue to a jaw-dropping financial rebound, Telkom South Africa is suddenly the comeback kid of the JSE in 2025.

With a 60% surge in share price since January and a bold R7.5 billion profit, the telecoms company — long tied to the state — is proving it can still surprise even its toughest critics.

A Fresh Chapter for Telkom

For years, Telkom was a slow mover in a rapidly digitising market. Burdened by historical debt and intense competition from mobile network giants, its future looked uncertain. The group had suspended dividends for three years, struggled with cost pressures, and watched investor sentiment fade. But 2025 has brought a dramatic plot twist.

After selling off its tower business, Swiftnet, for R6.5 billion, Telkom rebooted with a clean balance sheet, strong cash flow, and a plan to grow smartly — not just survive.

State Linked But Market Driven

Though Telkom is still officially classified as a State-Owned Company (SOC), the government’s grip has loosened. Directly, it owns 40.51%, while the Public Investment Corporation (PIC) — which manages pensions for government employees — holds another 7.45%. That puts total state involvement just shy of 50%, down from a majority stake held until August 2024.

Importantly, the PIC has reduced its stake from 15.89% last year, and its move away from control came just before Telkom announced its big turnaround. Coincidence? Some analysts think not.

Profits, Dividends and Public Confidence

Here’s what got everyone talking: Telkom’s earnings before interest, tax, depreciation and amortisation (EBITDA) jumped by 58.7% to R15.9 billion, while profit nearly quadrupled to R7.5 billion. Basic earnings per share? Up by 385.5%. Even headline earnings rose a healthy 44.8%.

And yes, Telkom is paying dividends again — even declaring a special one. For long-suffering shareholders, that’s a reward worth celebrating.

What’s Fuelling the Boom?

Operational improvements and cost discipline. Strong performance in data revenue. And a focus on long-term strategic goals like margin optimisation, moderate but sustainable revenue growth, and controlled capital expenditure.

Free cash flow, a metric watched closely by investors, soared over 500% to R2.8 billion — far surpassing expectations. In fact, Sanlam Investments initially didn’t think Telkom had this kind of performance in it. Now, their analysts are praising the group’s momentum.

Roy Mutooni, Sanlam’s portfolio manager, told BusinessDay TV that the company’s current financial position is “significantly greater than anybody on the market had seen before.” He believes Telkom has finally “found its stride.”

Can the Momentum Last?

With a share price now sitting at R53.83 (up from R33.58 in January), Telkom is being closely watched. Its P/E ratio hovers around 10 — suggesting the stock is still relatively affordable for investors who think the good times will continue.

Internally, the group says it’s focused on navigating global uncertainty and domestic pressures like unemployment and slow economic growth, while keeping its core telecoms business strong and resilient.

Their mid-term goals include keeping the EBITDA margin between 25% and 27%, spending 12% to 15% of revenue on future growth, and keeping net debt manageable.

Joburg’s View: The Underdog Wins Again

In the heart of Gauteng’s business circles, there’s renewed buzz around Telkom. Whether you’re a JSE investor, an ICT professional, or just someone who remembers the yellow Telkom payphones of old, it’s hard not to be impressed by the company’s resurgence.

Social media reactions from financial commentators have ranged from surprise to cautious optimism. “This is the Telkom we’ve been waiting for,” one X user posted. Others noted the timing of the turnaround — right after the PIC’s strategic exit — and speculated on what comes next for this partially state-owned giant.

In a nutshell: Telkom isn’t just another state-linked enterprise trying to stay afloat. In 2025, it’s showing real signs of life, growth, and leadership. With a cleaned-up balance sheet, confident strategy, and growing investor trust, South Africa might just be witnessing one of the great corporate turnarounds of the decade.

Source:Business Tech

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