With a three-year turnaround now concluded, JSE-listed Telkom on Monday posted a surge in normalised earnings – excluding one-off costs that had actually dragged the bottom line during the year ended March 31 – indicating that the information and communication technology giant was now “ready for growth”.

Headline earnings per share (HEPS) declined from 593.2c in 2015 to 330c in the year under review, while basic earnings per share (BEPS) also decreased from a restated 603c in 2015 to 432.8c in 2016.

However, Telkom pointed to a 15.5% increase in normalised HEPS to 658c for the 12 months under review, while BEPS, excluding one-off costs, jumped 32.4% to 767c.

Profit for the year reached R2.4-billion in the 12 months to March 31, down 25.4% on the R3.2-billion posted in the prior year. Normalised profit-after-tax was up 32.3% to R4-billion.

“The mobile business has delivered a star performance during this phase, reducing its loss before interest, taxes, depreciation and amortisation from more than R2-billion three years ago to R43-million this year. Since the fourth quarter, the mobile business has been breaking even on a monthly basis,” said Telkom Group CEO Sipho Maseko.

A 2% decline in voice and subscriptions revenue partially offset the gains, as voice use continued its downward trend and customers continued to substitute fixed lines for mobile services.

Overall, earnings before interest, taxes, depreciation and amortisation (Ebitda) remained stable at R8.8-billion, while normalised Ebitda increased 16% to R11-billion.

Bolstered by the inclusion of Business Connexion in the group’s financial outcomes and a solid performance by the company’s data service, group net revenue for the period under review was up 3.7% to R28-billion, while operating revenue grew 13.9% to R37-billion.

The normalised financial results excluded the costs of R2.2-billion and the related tax impact of R517-million for voluntary early retirement and severance packages throughout the year.

During the year, 3 878 employees accepted voluntary severance and early retirement packages and a further 437 employees were affected by outsourcing, reducing employee expenses by 10%.

Meanwhile, during the year under review, capital expenditure (capex) increased 16.8% to R6-billion as the group invested in fibre, long-term evolution (LTE) and mobile technologies, information technology systems, maintenance and rehabilitation and service-on-demand.

“To prepare our business for the future and to meet the evolving needs of our customers, we have made a substantial investment in modernising our network infrastructure to the latest technologies,” Maseko pointed out, noting that Telkon was currently migrating customers from legacy services such as fixed-line voice to bundled, converged and next-generation data products where demand was strongest.

“In the year ahead, an aggressive fibre roll-out is our number-one priority, while simultaneously deploying our other capital resources as we focus on revenue generation and cost efficiency to grow earnings,” he added.

Some R757-million was invested in fibre-to-the-home during the year, a significant rise on the R252-million spent in the prior year.

Telkom reported that mobile capex, which included LTE deployment, the provision of fixed wireless access through LTE and mobile LTE products, increased 37% to R660-million, while network rehabilitation and modernisation expenditure reached R674-million.

Service-on-demand capex increased 3.2% to R1.5-billion to provide network ‘last-mile’ connectivity and the related customer premises equipment to fulfil customer orders.

Telkom declared a dividend of 270c, a 10% year-on-year increase, for the 12 months to March 31.

“This financial year marks the end of the turnaround phase of our business,” Maseko noted, adding that the business was now ready for growth, equipped with a more flexible and agile operating model.

“In conclusion, having completed the turnaround phase of our strategy, we are embarking on the next phase, where our bias is to growth as we focus on implementing our new operating model,” he concluded.