Telkom earnings tumble as restructuring bites

Johannesburg - Telkom SA posted an expected 67% drop in first-half earnings on Monday, hit in part by restructuring costs after it had to let go hundreds of workers.

Telkom reported diluted headline earnings of 212.1 cents a share for the six months to September 30, from a restated 649.8c a year earlier. Headline EPS, the main measure of profit in South Africa, excludes certain one-off items.

The company said it laid off more than 400 managers whose voluntary retrenchment and severance packages cost R325m. Last year's results were also inflated by a one-time gain related to medical aid benefits for retired employees.

Telkom said total revenue declined slightly to R16.2bn as fixed-line usage shrank by 12%. However, mobile revenue increased by 5%.

"Operating revenue decreased due to the continuous decline in fixed-line voice revenue and lower data leased line revenue resulting from self-provisioning by other licensed operators," Telkom said in a statement.

Telkom shares have more than doubled so far this year, augmenting a rise of nearly 70% in 2013.

Telkom SA has laid off 406 managers, the chief executive said on Monday, following months of wrangling with unions over restructuring.

CEO Sipho Maseko said this in a conference call following the release of Telkom's first-half earnings.