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Telkom profit down, to exit Nigeria

Johannesburg - Telkom [JSE:TKG], Africa's largest fixed-line telephone operator, posted a 5% drop in first-half earnings, hit by the cost of starting up its new mobile business and said it was looking at exiting its struggling Nigeria business, Multi-Links.

The company said normalised headline earnings per share - which strip out one-time charges - totalled 265.7c in the six months to end-September, versus 280.6c a year earlier, and at a low end of its own forecast for a drop of zero to 20%.

Telkom, which has been looking to turn around its struggling Nigerian phone unit, Multi-Links, said it would exit that business and focus on its African internet service provider unit.

"It is essential to stabilise the business, which we are doing through exiting the CDMA business in Nigeria and focusing iWayAfrica mainly on corporate customers," the company said in a statement.

It said it had received a number of expressions of interest for the Nigerian unit.

Telkom said revenue dropped 5.4% to a R17.6bn, compared with R18.7bn a year earlier.

Telkom is attempting to offset a decline in revenue from traditional telephony by entering a crowded mobile phone market dominated by Vodacom Group [JSE:VOD], its former earnings driver, and MTN Group [JSE:MTN].

8.ta, Telkom's mobile phone business, has signed up about 186 033 customers since it was launched on October 15.

Telkom said its headline EPS, an earnings measure that includes certain one-time charges, totalled 243.6c, compared with a loss of 160.2c in the previous year, when it was hit by a tax on a special dividend and a fair value loss from the sale of its Vodacom stake.

Shares of Telkom have risen 5% quarter-to-date, lagging a 9% increase in the JSE's all-share index.
 
 
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