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Telkom expects lower earnings

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 20 Sept 2012

JSE-listed fixed-line operator Telkom says headline and earnings per share will be lower for the first six months of the year.

JSE rules require companies to inform shareholders as soon as there is a reasonable degree of certainty that results will differ by at least 20% from the previous corresponding period.

In a statement to stock owners, the group says basic earnings per share from continuing operations for the six months to September are expected to be at least 45% lower than in the first half of the previous financial year.

Telkom adds that headline earnings per share from continuing operations are expected to be at least 56% lower.

For the six months to September 2011, the group reported operating revenue down 3.2%, to R16.4 billion, and higher operating expenditure of R15.4 billion, mostly due to its impairment of iWayAfrica, higher depreciation and costs relating to its mobile arm, 8ta.

Last year, headline earnings per share from continuing operations for the first six months came in at 297c, while basic earnings per share from continuing operations were 291.5c.

Telkom says the lower earnings for this period are mainly the result of an "increase in the provision" for the Competition Tribunal fine of R449 million for "transgressions of the company dating back approximately 10 years".

Last month, the tribunal fined Telkom R449 million for abusing its monopoly between 1999 and 2004, in what was the first competition decision to be handed down against the telecoms group.

The case stems from a complaint submitted by the then South African Value-Added Network Services group and 20 other Internet service providers to the commission in 2002 around alleged price fixing and Telkom's alleged refusal to provide access to essential facilities.

Telkom has indicated it will appeal the decision, while the commission has filed an appeal against the tribunal's finding, with the Competition Appeal Court, arguing that parts of its argument against Telkom were not considered during hearings.

Telkom says its operational performance for the six months to August has been characterised by flat revenue and operating costs that escalated just below inflation. It will provide a further update when it has more certainty on its results, which should be published on 19 November.

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