Telecommunications company TeleMasters has defied the current global economic downturn, declaring a 3c interim dividend for shareholders. This is the fourth dividend it has announced since listing on the JSE AltX exchange, in March 2007.
According to the company, the 3c dividend reflects its ongoing health in a tough trading climate and its current dividend yield is 15%, third-highest on the JSE.
TeleMasters executive chairman Mario Pretorius attributes the group's strong performance to a focused sales strategy, having added 16 new channel partners in the last year, as well as being able to operate from a low cost base.
Meanwhile, the company has positioned itself for organic growth, while also feeling acquisitive. However, Pretorius says TeleMasters is taking a cautious approach to acquisitions.
“We are looking at potential acquisitions, since there is much consolidation happening in the telecommunications sector. There is always a danger of taking on something that is too big and which can materially change the way you do business,” he says.
“But, if the price is right and the acquisition makes sense, we are always keen to have a look. Anything we buy we must be able to swallow and digest.”
Pretorius says the company's cautious approach to buying is underlined by the fact that it has signed 56 non-disclosure agreements in the past year and a half, but only concluded one significant deal in this period - the acquisition of Motion Telecoms.
“We're pretty much debt free, even after the recent acquisitions of Motion Telecoms and a number of smaller players” adds Pretorius.
The company is currently trading under cautionary and an announcement could be made soon, he states.
Frequent dividends
TeleMasters was the first JSE company to attempt to pay monthly dividends to shareholders -although for regulatory reasons this move has effectively translated into the first and only company paying quarterly dividends. Aside from the frequency of dividend payments, at 15%. TeleMasters features one of the highest dividend yields on the JSE.
“We would love to be paying monthly dividends,” says Pretorius. “Our approach has always been that by listing our company we are offering, in essence, a strong investment. For the investor, this has to mean holding an income producing asset. There is no better way of rewarding an investor - and demonstrating the robust health of a company - than by frequently announcing and sharing the returns.”
In its July interim results announcement, TeleMasters' revenue was up 19%, before tax profit up 18%, after tax profit up 9%, gross profit up 5% and EPS up 8.7%, to 19.57c per share.
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