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Cape Town - Telkom [JSE:TKG] is mulling writing off the carrying value of its legacy network through a non-cash impairment charge, the parastatal announced in a Sens statement on Wednesday.
The consideration comes ahead of the release of the telecom's year end results expected around June 14 2013.
For over a decade, Telkom has been facing competition from mobile operators and a changing technology and regulatory landscape. It said these challenges contributed to its lower investment returns from its legacy network assets.
The price at which Telkom shares have been trading at had been significantly lower than its net asset value (NAV) for a considerable time.
At the end of September last year, the NAV per share was R57.
The value of the write down could not be confirmed but Telkom said an impairment charge will not impact the cash flow.
"An impairment charge is akin to an accelerated depreciation charge, which has no impact on Telkom's strong cash position, low indebtedness and ability to fund its capital programme from its own resources."
Telkom CEO Sipho Maseko said that an impairment will make the state-run firm more competitive, reported BDLive.
"It will also send a clear message to our stakeholders that we are prepared to take bold action to ensure that Telkom is positioned to succeed," he said.
Analysts have welcomed the proposal to impairment, according to Techcentral.
The agency quoted Absa investment analyst Chris Gilmour saying that an impairment is an excellent idea, but he added that it won’t make Telkom’s problems go away.
- Fin24
The consideration comes ahead of the release of the telecom's year end results expected around June 14 2013.
For over a decade, Telkom has been facing competition from mobile operators and a changing technology and regulatory landscape. It said these challenges contributed to its lower investment returns from its legacy network assets.
The price at which Telkom shares have been trading at had been significantly lower than its net asset value (NAV) for a considerable time.
At the end of September last year, the NAV per share was R57.
The value of the write down could not be confirmed but Telkom said an impairment charge will not impact the cash flow.
"An impairment charge is akin to an accelerated depreciation charge, which has no impact on Telkom's strong cash position, low indebtedness and ability to fund its capital programme from its own resources."
Telkom CEO Sipho Maseko said that an impairment will make the state-run firm more competitive, reported BDLive.
"It will also send a clear message to our stakeholders that we are prepared to take bold action to ensure that Telkom is positioned to succeed," he said.
Analysts have welcomed the proposal to impairment, according to Techcentral.
The agency quoted Absa investment analyst Chris Gilmour saying that an impairment is an excellent idea, but he added that it won’t make Telkom’s problems go away.
- Fin24
