Telkom earnings dive 80.6%

Telkom (TKG) has reported an 80.6% decline in headline earnings per share for the six months ended September 2012 to 37.2 cents from 191.7 cents in the previous period.

Group profit before tax declined 48.9% to R547 million‚ mainly due the impact of the provision for the penalty imposed by the Competition Tribunal‚ higher employee expenses due to annual salary increases and lower fixed-line revenue‚ partially offset by lower mobile termination rates and no impairment charge.

“Revenue continues to reflect the impact of fixed mobile substitution that has become more prevalent over the last few years being partially offset by growth in revenue from our own mobile offering and limited revenue growth in fixed-line data. Lower prices on data due to competitive offerings continue to negate the volume growth experienced in this area‚” it said.

The results for the half-year to September 2012 reflect the on-going challenging environment for fixed-line incumbents‚ it noted.

Revenue declined marginally by 1.5% to R16.1 billion with the pressure experienced in the traditional fixed-line business through lower fixed- line traffic revenue being partly offset by the growth of mobile revenue.

The group pointed to improvement in the mobile business‚ which showed a 198.3% rise in revenue largely as a result of increased ARPUs and number of revenue generating subscribers.

Operating expenses increased 1.6% to R15.6 billion due to the provision for the penalty imposed by the Competition Tribunal. Margins declined from 26.9% to 22.5% compared to the prior reporting period.

“While the industry landscape remains challenging for the Group we are determined to strengthen our competitiveness‚ improve our operating model and carefully manage our financial resources. Our focus will remain on utilising internally generated funding for capital expenditure planned over the next year‚” it said.

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Telkom earnings dive 80.6%