Telkom has reported better-than-expected results for the year to end-March, with headline earnings per share of 314c far exceeding consensus forecasts of 286c a share.
<B>Salient figures</B>
Telkom results for the year to 31 March 2003.
Figures for the previous year in parentheses, move in square brackets:
Operating revenue: R37.6b (R34.2b) [+10%]
Other income: R234m (R144m)
EBITDA: R12.81b (R9.6b) [+33.4%]
Operating profit: R6.51b (R4.19b) [+55.4%]
Profit before tax: R2.78b (R2.15b) [+29.3%]
Net profit: R1.63b (R1.22b) [+33.5%]
EPS: 292.6c (219.2c) [+33.5%]
HEPS: 314c (299.3c) [+4.9%]
Cash generated from operations: R12.06b (R11.58b)
Current assets: R9.92b (R11b)
Cash and equivalents: R1.12b (R724m)
Current liabilities: R14.11b (R12.65b)
This represented an increase of 4.9% against analysts` forecasts of a 4.4% decline.
Operating revenue rose 10% from R34.2 billion to R37.6 billion, with the fixed-line business accounting for 77.7% of that. The mobile business, consisting of Telkom`s 50% stake in cellular network provider Vodacom, accounted for 22.3% of operating revenues.
"This was a strong performance, with our results clearly demonstrating that our strategy to maintain our leadership positions in both fixed-line and mobile markets, and to deliver value for shareholders, is working," says CEO Sizwe Nxasana.
However, he says the results were affected by large non-core or one-off items in 2002 and 2003 and the fluctuations arising from measuring derivates at fair value and due to the volatility of the exchange rate.
"In fixed-line, we have successfully expanded our operating margins through improved customer service and high-value product offerings, balanced against a wide-reaching drive for operational efficiency and real cost savings.
"Improved operating cash flows have allowed us to reduce debt."
He says the balance sheet strengthened, with a net debt-to-equity ratio of 109.5% compared with 129.9% the previous year. Total debt was down by 11.7% to R22.42 million compared with R25.4 million previously.
"Increased competition and emerging technologies place greater importance on the need to further develop our group strategy to maintain our leadership position and deliver value for our shareholders," Nxasana says.
"We will continue to improve the effectiveness of our fixed-line business by improved customer service, innovative products and competitive pricing.
"We have also started to work more closely with Vodacom on potential synergies in areas such as marketing, procurement and products that will build value for both operators."
He says the group`s future performance will be further enhanced by its commitment and ability to drive operational efficiencies, increase cash flow and reduce debt.
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