Telkom's sale of Multi-Links will result in a net loss of R1 billion, which will affect the second half of the financial year, says the JSE-listed fixed-line operator.
The company yesterday issued a further trading update for the first six months to end September. Telkom says headline earnings per share from continuing operations will be between 33% and 38% lower, while basic earnings from continuing operations will drop by between 68% and 73%.
A year ago, Telkom reported normalised operating revenue down 5.4%, to R17.6 billion, while normalised headline earnings per share from continuing operations declined 5.3%, to 265.7c, and normalised basic earnings per share from continuing operations were 6.8% lower, at 260.2c.
Multi-Links, Telkom's troubled Nigerian operation, which was sold on 3 October, made an operating loss of R269 million. It is reported as a discontinued operation.
Telkom says the sale will result in a net loss of about R1 billion, mostly because of the “cumulative amount of exchange differences”, which was previously recognised in non-distributable reserves, but are now being realised.
Growing losses
The loss on the sale will be recognised in the second half of the financial year. In September, Telkom said Multi-Links' operating loss would be around R200 million, and it would lose R650 million on the sale.
At the time of the sale announcement, chairman Lazarus Zim said it was a “win-win” deal that would benefit both sets of shareholders.
Telkom bought 75% of the company in May 2007, for R1.96 billion. In January 2009, it bought out the balance of Multi-Links for a further R1.224 billion. It has written it down by more than R5 billion in total.
Telkom plans to release its results for the first six months of the year on 21 November. Its shares closed marginally lower yesterday, at R30.07, a drop of 0.73% or 22c.
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