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Telkom normalised earnings to jump up

Telkom’s normalised headline earnings per share are expected to be between 40% and 60% higher in the year ended March 31, the company said.

Telkom’s normalised headline earnings per share are expected to be between 40% and 60% higher in the year ended March 31 than they were in the 2014 financial year, the company said on Wednesday.

However, with retrenchments and other costs factored in, reported HEPS will be between 20% and 40% lower, it said.

Telkom has benefited to the tune of R743 million from lower payments to mobile operators as a result of the reduction in wholesale call termination rates. Lower asset impairments and writeoffs and a decrease in expenses related to a post-retirement medical aid liability helped boost normalised earnings.

“Our performance for the full year to 31 March 2015 continued the trend experienced and reported on in our interim results, where a challenging operating environment was once again compounded by competitive pressures and regulatory interventions,” the company said.

“We have managed to further stabilise the business and have performed reasonably well despite these challenges.”

Fixed-line voice usage and lease-line revenues continued to decline, while a “commendable performance” in its mobile business continued in the second half of the year, driven once again by growth in subscribers and higher post-paid and prepaid average revenues per user.

“Our mobile data offering is performing well with usage and revenue growing year on year. This as well as good data growth in our consumer market was instrumental in us achieving flat growth in gross revenue despite these challenges,” Telkom said.

“The group has continued to focus on the restructuring of our cost base and imposed efficiency interventions to achieve profit growth in our core business,” it said. “Although we managed to further improve on cost efficiencies in certain areas, we experienced delays in the implementation of other initiatives. The delayed initiatives included the workforce reduction initiative and the renegotiation of certain key contracts.”

There was a reduction in marketing expenses, consulting and business transformation expenses, and reduced vehicle costs. “We also reduced expenditure relating to our post-retirement medical aid liability for in-service members, certain pensioners and part-time staff,” it said. “These savings were partially offset by annual salary increases, higher bad debts and higher electricity costs as the economy and the challenges around energy supply negatively impacted our results.”

The company said it plans to release its annual results on 8 June. Its share price was quoted trading down by 3% in mid-afternoon trading on Wednesday.  — © 2015 NewsCentral Media

This article was published on Moneyweb with permission from TechCentral. To view the original, please click here.

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