Telkom turned around says Pule

Minister of Communications Dina Pule has thanked the outgoing members of the Telkom Board of directors “for their contribution in turning around Telkom” following the conclusion of the group’s AGM on Wednesday (24 October).

Telkom chairperson Lazarus Zim, Julia Hope and Jackie Huntley stepped down from the groups board on Wednesday. “The vacant board seats will be filled in due course,” the ministry of Communications said in a statement.

Minister Pule also said that a decision over the future of Telkom is  still ‘within the Cabinet process’ more than a month after the Department of Communications handed over its proposed options for the group.

Having blocked a deal between Telkom and Korea based KT Corp in June, Cabinet asked Dina Pule, to report back to it about all the options that were available for Telkom, in three months.

That deadline passed at the end of August, before the DoC said it had finally presented its list of options to cabinet in mid September.

The delays have led to much uncertainty from investors who speculated that Telkom may be nationalised, while other market rumours include Telkom merging its mobile operation  8ta, with Cell C.

“We are certain that the Telkom will overcome the challenges it is facing. The most immediate task of the Telkom leadership is to successfully deal with the anti-competitive claims against it. Telkom has to help the country competitiveness by upgrading its infrastructure to deliver high speed broadband for the benefit of our economy” said minister Pule.

“Telkom is well positioned to play its part in the socio-economic development of the country while enjoying a fruitful commercial existence,” she said.

Earnings shock

In September, Telkom advised that its headline earnings per share from continuing operations for the six months ending September 2012 are expected to be at least 65% lower than the prior comparative period.

HEPS from continuing operations for the six months ended September 2011 stood at 191.7 cents, 35.5% lower than in 2010.

Telkom advised shareholders that basic earnings per share from continuing operations for the six months ending 30 September 2012 is expected to be at least 45% lower than in 2011.

“The lower earnings are mainly attributable to an increase in the provision for Competition Commission fines relating to transgressions of the company dating back approximately 10 years.”

“The operational performance for the period up to 31 August 2012 has been further characterised by flat revenue and operating cost that escalated just below inflation,” it said in a statement on 20 September.

For the six months ending 30 September 2011, Telkom reported operating revenue down 3.2% to R16.4 billion, while basic earnings per share decreased 70.8% to 85.2 cents per share.

In August, the Competition Tribunal imposed penalty of R449 million on Telkom in its case against the South African Value added Networks Services (SAVA).

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Telkom turned around says Pule