Johannesburg - Telkom [JSE:TKG]
reported a 35% drop in full-year
profit on Monday, hit by expenses from from its new mobile
venture and job cuts, and warned it needed to get tougher on
Africa's biggest fixed-line operator said normalised
headline eranings per share for the year to end-March totalled 444.9c,
compared with a restated 686.7c a year earlier.
The results outstripped an average estimate of 408c in
a poll of 13 analysts by Thomson Reuters.
Operating revenue fell 5.2% to R33.4bn, while earnings before interest,
tax, depreciation and amortisation dropped by 11%.
Telkom said last month it expected to post a 25c to 45c decline in earnings, citing the costs of its new mobile
business, 8ta, and severance packages.
It also said at the time it was restating the previous
year's results to reclassify its Nigerian unit as an asset for
Hit by the decline in traditional telephony and stiff
competition from mobile heavyweights MTN Group [JSE:MTN] and Vodacom Group [JSE:VOD], Telkom has been struggling to rein in costs
and turn itself around.
The company said in April it would sell part of its
money-losing Nigerian unit, Multi-Links, for $52m.
That process has been delayed by a legal dispute with
private equity firm Helios Investment Partners over leases
related to telecom towers. A unit of Helios is suing Telkom for
Telkom is hoping its new mobile business will provide a
much-needed revenue boost, although analysts have said it will
likely face a tough battle in the competitive industry.
The company said in February it would offer severance
packages to help cut costs. At least 1 650 employees had already
taken such packages, a spokesperson for trade union
Solidarity told Reuters last month.
Shares of Telkom, which is nearly 40% owned by government, are down about 2.5% so far this
year, compared with a 3% decline in Johannesburg's All-share [JSE:J203].