Telkom's earnings will be lower for the first half-year, as a result of higher expenditure.
The listed telecoms giant this morning issued a trading update telling shareholders that earnings will be lower than a year ago, because of a 7.5% salary increase, which added R144 million to operating expenses.
In addition, start-up costs relating to the unveiling of its mobile arm, 8ta, added another R205 million to the operating expense line. Telkom also had once-off items that impacted earnings during the first half, such as a R201 million impairment of Multi-Links.
Earnings per share are expected to be between 85% and 105% lower than last year's 7 860.9c. Last year's figures, however, were distorted by the contribution from the sale of Vodacom. Normalised earnings per share will be as much as 20% lower than the 160.2c reported last year.
Headline earnings per share, which includes a secondary tax payment of R60 million on a dividend payout, will be between 240% and 260% higher. Last year, this figure was a loss per share of 160.2c.
Normalised headline earnings per share, which strips out once-off items, will be between 0% and 20% lower than the 280.6c reported a year ago.
The main differences between basic earnings and headline earnings are the profit on the sale and gain on unbundling of its 50% share in Vodacom in the previous period, and the related capital gains tax and impairments and write-offs relating to property, plant and equipment, and intangible assets.
Telkom's results are expected to be published on 22 November.
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