Blue Label shares tank on flat full year results

Shares in Blue Label Telecoms took pain again on Wednesday, dropping as much as 12% after the telco group released its financials for full year 2018, showing a marginal increase in revenue and a smaller profit.

The sizeable drop in share price follows a similar move on Tuesday, where the share fell 8% after the group published Cell C’s results, which showed the mobile operator was still making a significant loss.

Blue Label Telecoms on Wednesday reported a 1% rise in revenue to R26.8 billion for the year ended May 2018, with operating profit declining to R1,097,549, from R1,174,890 before.

Diluted headline earnings per share, also declined from 113.22 cents per share, to 107.41 cents per share.

After the results were announced, the group’s share price dropped 12% to reach a low of R6.80. However, by 11h00, it had recovered slightly to trade at R6.87.

The telecoms group said that core headline earnings for the year amounted to R1.03 billion, an increase of R236 million (30%).

Core headline earnings per share increased from 116.24 cents per share to 120.61 cents per share (4%), post a dilution resulting from the issue of an additional 272 million shares to fund an element of acquisitions made during the financial year, it said.

Core headline earnings are calculated after adding back the amortisation of intangible assets as a consequence of the purchase price allocations to headline earnings.

Blue Label acquired 45% of Cell C in August 2017, for R5.5 billion, and 47.37% of 3G Mobile for R0.9 billion. It then acquired the remaining 52.63% of 3G Mobile for R1 billion in December.

The core headline earnings comprised the group’s share of profits of R569 million in Cell C which included the recognition of an increase in a deferred tax asset of R1.92 billion, of which the group’s 45% share amounted to R865 million, its profit contributions from 3G Mobile of R157 million and from Airvantage of R2.6 million.

These contributions were from the effective dates of each acquisition and not for a full year, it said.

Read: Cell C adds 600,000 subscribers to climb to 16.3 million

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Blue Label shares tank on flat full year results