Telkom share price soars 8% after trading update
Shares in Telkom continued to climb in mid-morning trade on the JSE, after the group said it expects to report a rise in earnings for the year ended March 2017.
By 11h15 shares in the group advanced 4.68% or R3.67, to R82.05, having added 3.5% in the afternoon session on Thursday following a trading update.
Shares in Telkom dropped to as low as R12.50 in May 2013, however, since the appointment of Sipho Maseko at the end of March of 2013, the company has seen a complete turnaround in fortunes.
Over the past year alone, the telco has seen its shares climb from R55.35, to a current high and a market cap of R41.3 billion.
Wayne McCurrie, a fund manager at Ashburton Investments, noted a big distortion in the company’s earnings due to retrenchment costs which formed part of three-year turnaround strategy, completed in 2016.
McCurrie said that the company’s earnings are “probably slightly better than expected”.
Telkom said in a statement late on Thursday that the prior year’s reported earnings were impacted by voluntary severance packages (VSPs) and voluntarily early retirement packages (VERPs) of R2.193 million with a related tax benefit of R517 million while the current year impact is significantly lower at R66 million, with a related tax benefit of R13 million.
As a result, the reported headline earnings per share (HEPS) is expected to increase between 110% and 130% when compared to the prior year.
The reported basic earnings per share (BEPS) is expected to increase between 60% and 80%, Telkom said.
Excluding the impact of VSPs and VERPs and the related tax benefit, HEPS is expected to
increase between 0% and 20% and BEPS is expected to be between 10% lower and 10%
higher than the prior year, the telco said.
Headline earnings are expected to be between 363 cents to 429 cents higher than 330 cents in 2016, while excluding VSP and VERP, that figure is expected to be between zero cents per share and 131 cents per share higher than 657.9 cents per share reported in the prior year, Telkom said.
Telkom’s earnings include the performance of BCX, and are expected to be published on 5 June.
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