Shares in Blue Label Telecoms took pain again on Wednesday, dropping as much as 12% after the telco group released its financials for full year 2018, showing a marginal increase in revenue and a smaller profit.<\/p>\n
The sizeable drop in share price follows a similar move on Tuesday, where the share fell 8% after the group published Cell C’s results, which showed the mobile operator was still making a significant loss.<\/p>\n
Blue Label Telecoms on Wednesday reported a 1% rise in revenue to R26.8 billion for the year ended May 2018, with\u00a0operating profit declining to R1,097,549, from R1,174,890 before.<\/p>\n
Diluted headline earnings per share, also declined from 113.22 cents per share, to 107.41 cents per share.<\/p>\n
After the results were announced, the group’s share price dropped 12% to reach a low of R6.80. However, by 11h00, it had recovered slightly to trade at R6.87.<\/p>\n
The telecoms group said that core headline earnings for the year amounted to R1.03 billion, an increase of R236 million (30%).<\/p>\n
Core headline earnings per share increased from 116.24 cents per share to 120.61 cents per share (4%), post a dilution resulting from the issue of an additional 272 million shares to fund an element of acquisitions made during the financial year, it said.<\/p>\n
Core headline earnings are calculated after adding back the amortisation of intangible assets as a consequence of the purchase price allocations to headline earnings.<\/p>\n
Blue Label acquired 45% of Cell C in August 2017, for R5.5 billion, and 47.37% of 3G Mobile for R0.9 billion. It then acquired the remaining 52.63% of 3G Mobile for R1 billion in December.<\/p>\n
The core headline earnings comprised the group\u2019s share of profits of R569 million in Cell C which included the recognition of an increase in a deferred tax asset of R1.92 billion, of which the group\u2019s 45% share amounted to R865 million, its profit contributions from 3G Mobile of R157 million and from Airvantage of R2.6 million.<\/p>\n
These contributions were from the effective dates of each acquisition and not for a full year, it said.<\/p>\n