Shares in telecommunications company Telkom, dropped by as much as 10% in afternoon trade on Tuesday, following a muted trading update.<\/p>\n
On Monday (1 February), Telkom\u00a0 said that group net revenue for the three months ended December 2015, advanced 7% to R7.25 billion, while group operating expenses grew 13% R4.7 billion<\/p>\n
Telkom said that fixed voice revenue of R3.6 billion, was down 5%, however, mobile data revenue of R417 million, was up 56%.<\/p>\n
The Competition Tribunal of South Africa approved a R2.6 billion merger deal between Business Connexion Group and Telkom, in the second half of last year.<\/p>\n
BCX employs approximately 6,700 people in Africa and generates revenue in excess of R6 billion per annum.<\/p>\n
Excluding BCX\u2019s operations, Telkom said that group net revenue R6.76 billion was down 0.3%.<\/p>\n
\u201cExcluding BCX, our operating expenses remained flat as we benefited from our multiyear
\ntransformation initiatives. We also made progress on the sale of non-core assets during the quarter.\u201d<\/p>\n
By 17h15, shares in Telkom traded at R54, down R5.76 or 9.64%. On Monday, shares declined 7% by close of play on the Johannesburg Stock Exchange, having opened at R65.<\/p>\n
The current price is close to its 52-week low of R52.71, and down from a high of R85.78, giving the group a market cap of R28.5 billion.<\/p>\n
Telkom said that the economic and operating environment has deteriorated driven by lower commodity prices and a weakening rand.<\/p>\n
It said that the outlook remains challenging on the back of lower growth expectations, higher interest rates and rising inflation. \u201cAgainst this backdrop, we prioritised our capital expenditure programme to focus on the growth areas of fibre and LTE,\u201d the group said.<\/p>\n
Group capital expenditure of R1.5 billion for the quarter was up 22%.<\/p>\n
\u201cWe\u00a0 expect\u00a0 continued\u00a0 weakness\u00a0 in\u00a0 the\u00a0 economy\u00a0 and\u00a0 anticipate\u00a0 that\u00a0 our customers\u00a0 will migrate to cheaper packages or delay spending on new infrastructure.<\/p>\n
\u201cWe will partner with our\u00a0 customers\u00a0 to\u00a0 contain\u00a0 costs as\u00a0 well take\u00a0 up any opportunities\u00a0 presented\u00a0 by\u00a0 the\u00a0 current environment to grow our business,\u201d Telkom said.<\/p>\n
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