Telkom released its interim results for the six-month period ending September 30, 2025. On the surface, the headline number is extremely strong. According to the report, Telkom’s headline earnings per share (HEPS) from continuing operations reached 305.6 cents, while group revenue rose to R22.1 billion. HEPS is South Africa’s main profit gauge.
For a company that has spent years in a difficult turnaround, this triple-digit growth feels like a vindication. But for seasoned investors, the very metric that makes the headlines may be exactly what deserves the least attention. The market seems to have already priced in much of this mechanical leap. The real test is not quantity, but quality.
Telkom’s story has clearly moved beyond the “turnaround” and “disposal” narratives of full year 2025. The bigger questions now are about sustainability, margin strength, and the true underlying health of its data-driven engine. The recent numbers released ask us to look through the shiny headline to the substance beneath.
The 115% HEPS surge did not come from runaway operational growth. Much of it was a mathematical gift, driven by two key structural effects.
First, the prior comparative period (H1 full year 2025) included significant once-off costs, a large derecognition loss related to the Telkom Retirement Fund and restructuring charges. Those non-recurring items depressed last year’s base, so their absence this year automatically lifts growth.
Second, Telkom’s de-leveraging strategy made a meaningful impact. After selling Swiftnet (its masts and towers business) for billions, Telkom used a large portion of that capital to pay down approximately R4.75 billion in debt. That repayment materially reduced its finance costs. In the results, we see the benefit, lower net finance charges, less risk, and a more stable platform for future dividends.
These are not cosmetic gains. The balance-sheet repair is real, and it contributes significantly to the earnings beat. But while debt reduction and fewer one-offs are critical to Telkom’s health, they are not the same thing as accelerating core operations.
With structural gains accounted for, the operational businesses provide a better picture of underlying health. In quarter one in full year 2026, mobile service revenue had grown by 7.8%. The current half-year results confirm whether that momentum held.
Telkom’s mobile business remains central. Blended Average Revenue Per User (ARPU) in quarter one was R75, while prepaid average revenue per user (ARPU) slipped to R58 as the business expanded into lower-income, non-metro regions. The results indicate that blended ARPU has largely retained or held around R75 based on market reporting, showing the company is maintaining profitable growth.
Openserve, Telkom’s fibre division, continues to be a core growth driver. In H1, Openserve’s revenue grew by 2.7% to R6.33 billion, with fibre-related revenue up 10.1%. The number of homes passed reached 1.5 million and the connectivity rate improved to 52%. This connectivity rate reflects both network reach and effective commercialisation. If it continues to grow while maintaining or increasing connectivity, Openserve strengthens its competitive moat. Conversely, any decline in pass-to-connect ratios or fibre revenue growth would raise immediate concerns.
Margin management remains crucial. Telkom’s firs quarter EBITDA (earnings before interest tax, depreciation and amortisation) margin was 25.9%, reflecting disciplined cost management. The current results confirm these gains were largely sustained. In a high-inflation environment, and with competitors like MTN and Vodacom, protecting margins is key. Analysts will also assess the impact of macro pressures such as load-shedding and supply chain issues on costs.
BCX remains a deeply personal and strategically important part of Telkom’s story. Having worked there, I know the pressures it faces in a tough enterprise and IT market. The interim results did not show a breakout turnaround for BCX, but they did indicate intentional progress. Telkom continues to shift the business mix toward higher-margin IT services, while focusing on cost optimisation and operational efficiency.
Even flat or modest revenue performance in this unit is significant, as it suggests that BCX’s transformation is real and not merely aspirational. Analys and investors will be paying close attention to management commentary on BCX’s strategic priorities, including scaling its cloud, analytics, and fibre-based offerings. The trajectory of this division will be a key indicator of whether Telkom can successfully stabilise and grow its enterprise operations.
With the results now in hand, investors should therefore look beyond the headline HEPS number. Key questions they should be asking is whether group revenue growth accelerated, EBITDA margins held or expanded, net finance charges fell as expected, mobile blended ARPU remained stable, Openserve connectivity stayed above 50%, and whether management’s outlook conveys confidence.
Telkom’s full year 2025 was a year of celebration, a graduation. full year 2026 is the year of proof. These first quarter results, with repaired balance sheet and strong data traction, provide reason for cautious optimism. Consistency going forward will determine whether the company has genuinely strengthened or whether the headline gains are temporary.
- Dr Bandile Hadebe, Dual Managing Director at Eta Data and Health Accelerator (and a Former Portfolio Executive at BCX)
