Telkom highlights “sufficient sources of liquidity”
Embattled telecoms group Telkom (TKG) says it has “sufficient sources of liquidity”, with funding options including an un-utilised R10 billion domestic medium-term note program.
The group is awaiting the outcome from a case brought against it by anti-trust regulator, the Competition Commission for excessive pricing and abuse of market dominance dating back to 2004.
The Competition Tribunal heard closing statements on Wednesday and is set to rule on the matter in due course.
The Competition Tribunal asked the tribunal to fine Telkom R1.2 billion if it was found guilty, having originally asked for a penalty of R3.5 billion, or 10% of the group’s earnings.
In its closing statements, Telkom asked for a penalty of R20.5 million, if found to be guilty.
Well known analysts David Shapiro said that a large fine will put another nail in Tekom’s coffin. Shapiro added that a significant fine may very well force Telkom to sell off some of its assets to bolster their cash flow.
In its interim results for the six months ended September 2011, Telkom announced a 35.5% fall in headline earnings per share from continuing operations to 191.7 cents, with operating revenue for the reporting period at R16.4 billion. However, operating expenditure increased 8.2% to R15.4 billion.
Bloomberg reported that the firm planned to approach international bond markets, for the first time, to source funding to refinance its domestic debt due in April.
“Telkom is currently very lowly geared at 0.5 to 1 net-debt to EBIDTA ratio at September 30, 2011 with R2.7 billion of cash and cash equivalents. Add to this, the un-utilised R10 billion domestic medium-term note program (registered late 2011) is expected to provide Telkom sufficient sources of liquidity to select from,” the group told BusinessTech.
It said that the issuing of a bond is one of the various options that it has to its avail with regard to ensuring its liquidity.
“It is not the first time that Telkom is accessing offshore markets as we endeavour to diversify the sources of our liquidity funding. This allows Telkom the latitude of selecting the funding option that is most beneficial to the company and its stakeholders,” it said.
In reporting its interim results, Telkom said that its financial position remains strong. It said that it had cash balances of R1.27 billion, down from R1.77 billion previously and attributable to the repayment of a portion of a syndicated loan of R1.28 billion.
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