Telkom shareholders are feeling the love today. On Wednesday, the telecommunications giant announced that it expects a spike in full-year earnings for the period ending in March, and the market reacted with pure excitement. By 4pm, shares had climbed 10.36% to hit R65.62, marking a stunning 65.85% rally over the last 12 months. Eish, for those who bought in a year ago, that’s not just change—that’s a serious payday.

At the heart of this jump is a forecasted rise in Basic Earnings Per Share (EPS). The company is looking at a range between 679.2c and 735.8c, which is up to 30% higher than the 566c reported in the previous cycle. When you strip out all the messy, one-off financial drama, Headline Earnings Per Share (HEPS)—the number that investors actually use to judge the real health of the business—is predicted to soar by 45% to 55%.

Management isn't just lucky; they’ve been doing the hard work of trimming the fat. The company credited this performance to a major focus on structural cost optimisation. They’ve also managed to bring down their debt levels, which in turn lowered those pesky finance charges that usually eat into profit margins.

It wasn't all smooth sailing, though. The bottom line took a bit of a knock from some one-off pains. Specifically, there was an after-tax derecognition loss of R451m from the Telkom Retirement Fund, which shaved off 91.9c per share. Then you add on the R117m in restructuring costs, costing another 23.8c per share. Without those speed bumps, the numbers would look even shinier.

"Earnings growth was primarily driven by a strong underlying operating performance, continued focus on structural cost optimisation and lower finance charges resulting from reduced debt levels."

Comparing these numbers to last year is a mission because of the property sales. In the prior period, the company enjoyed a nice boost from selling properties, which brought in R654m compared to only R194m this time around. Even with less of a property-sale cushion, the core business is proving it can stand on its own two feet.

Last year, the group finally offloaded Swiftnet, their mast and tower business. Because that was classified as a discontinued operation, the year-on-year comparison for total operations has to account for that shift. It’s clear that shifting focus away from infrastructure ownership to more agile services is starting to pay dividends for the team in Centurion. This strategic shift has successfully improved the company's operational flexibility and market responsiveness.

This trend of shedding legacy assets to free up cash is becoming the standard playbook for telcos across the continent. Mobile operators in Lagos and Nairobi have moved away from hardware to pure service models. This pivot has helped them navigate high inflation and fluctuating currency values. For Telkom, the strategy is hitting the sweet spot.

Investors are watching to see if this momentum holds through the next fiscal year. With debt down and costs under control, the company has set the stage for a cleaner balance sheet. If they keep this pace up, the shareholders who jumped in early could see a very lekker dividend season ahead.