Listed fixed-line operator Telkom will report a headline loss per share in the half-year to September due to once-off items.
The news sent its shares down 2.37%, to R41.25, in mid-morning trade. Telkom stock opened at R42.50.
Headline earnings per share will be between 130% and 140% lower than last year, which will take it into a loss position. Once-off items affecting earnings include a goodwill impairment of R2.128 billion against Multi-Links Nigeria, and profit on the sale of Telkom Media of about R68 million.
Normalised headline earnings per share - adding back the once-off items - show a slightly better position, but are still expected to halve.
Telkom says normalised headline earnings per share should decrease by between 45% and 55%. Normalised headline earnings per share are key indicators of financial performance.
Chris Gilmour, an analyst with Absa Investments, points out that, without the Vodacom stake, the company's bottom line earnings have been trimmed substantially. Vodacom was separately listed in May.
Last year, the company reported headline earnings per share of 1 634.8c, which was a 0.4% improvement on the previous period. Earnings per share were 1 565c, a 0.1% decline.
Telkom says its business has been affected by margin pressure in SA, as the company felt higher-than-inflation increases in operating costs.
The telecommunications company says this is due to higher payments to local and international operators, and salary increases that were reached with the union after a strike earlier this year.
Its Nigerian operations reported operating losses in line with those reported last year. Telkom says trading conditions in Nigeria remained tough as a result of local economic factors, pricing pressures and the short-term strategy to reduce inventories and acquire subscribers by subsidising certain handsets.
Its results are expected to be released on 23 November.
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