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* FY EBITDA up 8.5% to 11.3 billion rand
* Analysts had expected EBITDA of 10.6 billion rand
* Mobilie service rev boosted by 85.9% rise in active subscribers
* Shares up as much as 13.6% to highest since listing in 2003 (Recasts, adds shares, writes through)
JOHANNESBURG, May 27 (Reuters) - South Africa’s Telkom SA reported a forecast-beating full-year core profit on Monday as an upbeat performance in its mobile business offset declines in the traditional fixed-line unit, sending its shares to a record high.
Telecom groups across Africa have been investing heavily as demand for internet speed and data surges with growing smartphone usage.
Forty percent state-owned Telkom, which still runs South Africa’s biggest fixed-line network, has been transforming its business by migrating customers to wireless technologies and starting its own mobile business.
That investment is paying off, evidenced by its 8.5% growth in earnings before interest, tax, depreciation and amortization (EBITDA) to 11.3 billion rand ($782 million) and 5.3% rise in revenue, mainly driven by a 58% jump in mobile service revenue.
“The significant growth in mobile service revenue was supported by an 85.9% growth in active subscribers to 9.7 million,” Chief Executive Sipho Maseko said, adding that value for money data-led offers had attracted customers.
Analysts polled by Refinitiv had expected EBITDA of 10.6 billion rand.
The group has also been expanding its network of mobile phone masts to support its growth in that area, and is rationalising its property portfolio and cutting jobs.
Sanlam Private Wealth Portfolio Manager Nick Kunze noted the company is offloading some of its 1,332 properties to increase shareholder value. “(This) has been speculated (about) for a while, hence the strong run in the shares over the last few weeks,” Kunze said.
Telkom’s property management company Gyro has a tower build programme for 2,000 sites over the next three years. It has also continued rationalising its portfolio and started consolidating business units into regional offices and warehouses.
The group added it is decommissioning 62 exchange properties that are no longer fit for operational purpose.
Telkom also said it had cut group permanent jobs by 12.5% to 15,296 through voluntary severance packages, voluntary early retirement packages and other layoffs.
Some cuts came from Telkom’s information and communications technology business BCX, where the number of permanent employees fell 13.4% to 5,782 under a cost reduction programme.
Shares in Telkom surged as much as 13.6% to touch their highest since listing in 2003. The stock was up 6.43% at 92.15 rand by 1402 GMT.
