TeleMasters announces operating loss

Fixed-line telecoms service provider, TeleMasters (TLM) on Thursday (February, 16) announced a diluted headline loss per share of 2.50 cents for the three month period ended December 2011, compared to diluted headline earnings per share of 8.00 cents previously.

The ALT-X-listed group noted a diluted loss per share of 2.50 cents, from earnings per share of 8.05 cents in 2010.

Revenue for the period declined to R55.96, from R86.23, with an operating loss of R1.39 million, from a prior profit of R5.067 million.

The group operates exclusively in the South African corporate market, providing clients with access to telecommunication technologies and services.

“The first quarter reflects management’s expectations as voiced earlier that 2012 will be a tough transitional year. The traditional least-cost routing (LCR) turnover decreased by 35% over the corresponding previous period due to the loss of two large clients that reached the end of tender periods. Expectations are that no more LCR tenders will be issued in future. The licenced telecoms services are being rolled out and have reached 260 clients.
“The challenge is to exceed the loss of revenue with the conversion of 600 long-standing current clients and the acquisition of new clients to the company’s Digital Direct service,” TeleMasters said.

It said that a further R1.6 million has been invested in capital acquisition in order to upgrade the interconnect facilities to be independent of 3rd party vendors and so increase the quality of service. The company added that it has amended its billing, processes, sales model, logistics and technical support to serve the requirements of cellular and fixed line billing and facilitate geographic number porting successfully.

“A number of learning experiences were inevitable and structural and procedural adjustments were made to decrease response time and increase efficiency of service provision. The company expects an ever-increasing level of quality and its current level of voice service quality rivals any other offering in the market. With increased billing the company will realise economies of scale in its operations and fixed cost components,” TeleMasters said.

Operating expenditure has remained constant and active measures to reduce this are being implemented, the group said.

“Gross margin is expected to increase as number porting is rolled out and incoming call revenues are realised. The company has sufficient reserves to ensure the roll out of the needed technology,” it said.

On December 21, the board declared a quarterly interim dividend of 1 cent per share.

TeleMasters has previously announced its plans to delist from the JSE because of low trading volume in its shares in relation to the cost of listing.

Shares in TeleMasters traded at R1.30 on the JSE.

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TeleMasters announces operating loss