|Vodacom listing hits Telkom earnings|
Friday, 13 November 2009 02:00
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.
This year, however, including the profit from Vodacom`s sale, the company`s earnings per share will shoot up by between 1 565% and 1 575%. However, excluding the profit to reach a normalised position, earnings per share will drop by between 130% and 140%.
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.
Add your 2Cents
Newer news items:
Older news items: