JSE-listed Telkom on Monday declared a dividend of 422c a share – a year-on-year jump of 56.3% – as it reported improved profitability for the year ended March 31.

The telecommunications giant reported a 12.4% increase in headline earnings a share to 731.4c on the back of improved operating profits, while basic earnings a share declined 1.5% to 749.1c.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) remained flat at R10.9-billion with an Ebitda margin of 26.7%.

The group recorded a 66% increase in profit after tax to R3.85-billion as a result of lower costs related to voluntary early retirement packages (VERPs) and voluntary severance packages (VSPs) of R66-million during the year to March 2017, compared with R2.2-billion in the prior year.

Profit after tax, excluding the VERPs and VSPs, reached R3.9-billion.

Excluding the VERPs and VSPs, operating revenue was up 9.8% to R41-billion during the year under review owing to the full-year inclusion of BCX and a solid performance from the mobile business, while net revenue was up 7.9% to R31.9-billion, positively impacted by the reclassification of BCX cost of sales as part of the change of the group accounting policy.

BCX revenue was only included for seven months in the prior year.

Mobile service revenue surged 38.4% to R3.5-billion driven by a 47.7% increase in active customers.

Telkom also reported a 43.3% increase in capital expenditure (capex) to R8.65-billion, with a capex-to-revenue ratio of 21.1%.

“The largest portion of our capex was deployed to our primary revenue generating areas, which are our fibre deployment zones and supporting the acceleration of our mobile growth. Our unrelenting investment drive for fibre and mobile has now created the required momentum to support our strategic growth areas,” Telkom said.

Telkom ended the year with a group cash balance of R1.5-billion, a 40.2% decline on the prior year owing to increased cash outflows relating to increased dividend payment, VERP and VSP payments and a significant capital investment.