Telkom is expecting to maintain its robust performance in its half-year results for the period ended September, and will report a rise in headline earnings per share (HEPS), as well as basic earnings per share (BEPS).
In a trading update today, the company says HEPS is expected to increase between 25% − 35% and BEPS is expected to increase between 20% and 30% compared to the prior interim period ended 30 September 2020.
Notwithstanding the strong performance in earnings, it says the trading environment remains challenging, although: “Telkom expects to sustain its topline revenue compared to the prior year and grow its profitability slightly ahead of revenue.”
Telkom notes its half-year performance was mainly due to a significant decline in finance charges, fair value movements and foreign exchange losses compared to the prior period. These declined by 35% from R1 billion reported in the prior year, to R659 million attributable to Telkom’s funding strategy and the ongoing settlement of maturing debt, which resulted in finance charges reducing by 25% from R723 million reported in the prior period to R541 million.
“Our conservative funding approach enabled us to strengthen our balance sheet by repaying maturing debt of approximately R1.1 billion in the prior financial year, with R900 million repaid in the first half of the prior financial year. In the first half of the current financial year, we settled a further R100 million maturing debt.
“Our funding strategy allowed us to balance our cost of debt ratio to 52:48 floating to fixed; this ensures the risk to changes in interest rates remain balanced. Fair value movements and foreign exchange losses reduced significantly by more than 90% from R209 million reported in the prior period to R17 million, due to currency volatility and a favourable foreign exchange hedging position.”
The telephony group's interim results for the six months ended 30 September 2021 will be released on 9 November.