Johannesburg - Fixed-line operator Telkom [JSE:TKG]
said on Monday the planned sale of its Nigerian business would not proceed and it would cut off funding to the unit.
Telkom said in a statement that certain conditions for the $52m sale had not been met. Telkom is locked in a legal dispute over lease agreements in Nigeria which needs to be resolved for the deal to go ahead.
Earlier it reported a 35% drop in full-year profit hit by expenses from its new mobile venture and job cuts, and warned it needed to get tougher on costs.
Africa's biggest fixed-line operator said normalised headline earnings 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 sale.
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.
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 about $250m.
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].