Stock in JSE-listed Telkom moved 3.86% higher, after it said its earnings for the year to March would be boosted.
The group told shareholders in a statement that its basic and headline earnings per share would be at least 20% higher in the full year. Although it has yet to provide a specific range, its shares gained 119c, to R32, yesterday.
Telkom says the results for the full year will be "positively impacted" by a net curtailment gain of around R2 billion that it has recognised on its post-retirement medical aid liability, as well as a related tax benefit of around R246 million. Its results should be published on 13 June.
In addition, 2013's results were hampered by its R12 billion impairment of its legacy network, as well as its R592 million provision for a Competition Tribunal fine, as well as the R434 million it spent on its voluntary severance and early retirement packages.
Telkom accelerated the write-down of its network in a bid to bring its net asset value more in line with its share price, as its net asset value was about double that of its stock.
For the year to March 2013, Telkom reported total revenue of R33.1 billion, lower than last year's R33.7 billion, as decreased voice revenue, which dropped 4.7%, weighed on income.
Operating expenses, which include the R12 billion write-down, leapt significantly from R31.3 billion to R44 billion, dragging Telkom to a comprehensive loss of R11.7 billion, as it has to take the non-cash charge through the income statement.
As a result, its basic and diluted loss per share came in at 2 276.2c, compared to last year's overall loss per share of 42.3c. However, stripping out the impairment, operating expenses increased at a lower level than inflation, at 2.2%, to R32 billion.
Headline earnings and diluted headline earnings per share declined 73.2%, to 87c, but the figure is still in positive territory, while, excluding the write-down, Telkom reported a post-tax profit of R501 million, an improvement on its continuing operations profit of R179 million in 2012.
Telkom, which has settled long-outstanding issues with the tribunal, has indicated it is seeking to cut costs further in future, despite having trimmed its workforce. It is in talks with MTN to outsource the network operations of its mobile arm.
CEO Sipho Maseko has been moving to bolster the company's leadership structure since last year, as he seeks to turn the company around.
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