Telkom abandoned its pay television subsidiary for a mere R68 million in the past year, but has written off a debt worth R471 million and is still carrying a provision for R28 million for retirement obligations.
Telkom created Telkom Media in August 2006 with an empowerment shareholding. The subsidiary was awarded a commercial satellite and cable subscription broadcast licence from the Independent Communications Authority of SA (ICASA) in September of the following year.
However, the concept never got off the ground and Telkom decided to reduce its investment in the company in March 2008.
Telkom was not able to get its price for the unit and the fixed-line operator decided to abandon it. In May 2009, Telkom sold its stake for a nominal amount of R68 million to Chinese-owned Shenzen Media SA.
The unit was renamed Super5Media and was expected to become operational by the middle of this year. However, it has applied to ICASA for an extension, and is expected to go live in September. The company has, as yet, not provided any information about its expected arrival on the pay television scene.
Counting the cost
Telkom's latest annual report for the 2010 year to March, released yesterday, shows it is still carrying some of the burden of the abandoned company.
During 2009, Telkom Media made an after-tax loss of R281 million, but the company managed to reverse the situation in its most recent financial year to make an after-tax profit of R106 million. The bulk of this gain came from the reversal of an “onerous lease”, which added back R104 million in expenses.
Despite the sale, Telkom is carrying a R28 million provision for asset retirement obligations, a figure that has decreased from 2009's amount of R151 million. In addition, Telkom Media was in debt for R471 million, an amount that is not reflected in Telkom's 2010 figures and appears to have been written off.
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