Investors pushed Telkom’s share price more than 13% higher in intraday trading on Tuesday after the JSE-listed telecommunications operator said it will report a bounce in full-year headline earnings in two weeks’ time.
Headline earnings per share for the year ended 31 March 2021 will rise by as much as 155%, albeit off a lower base from a year ago, while basic earnings per share could rise by as much as 310%, Telkom said.
“This was mainly due to the significant growth in reported group Ebitda of approximately 20% compared to the prior year and a reduction in the reported effective tax rate from 37.6% to 30.5% in the current year,” Telkom said. Ebitda, or earnings before interest, tax, depreciation and amortisation, is a measure of operational performance and is often used as a key financial metric by telecommunications operators.
The numbers include the impact of voluntary severance packages, voluntary early retirement and section 189 retrenchments of R270 million and a related tax impact of R76 million. The prior year earnings included a R1.2 billion impact from job cuts, which also had a tax impact of R332 million.
The impairment of receivables and contract assets remains high, in line with the prior year, which included a provision of R626 million reflecting the uncertain environment relating to Covid-19, Telkom said.
“The group achieved strong underlying performance, with solid growth in underlying operating profit driven by strong growth in underlying group Ebitda compared to the prior year,” it said.
“The growth in underlying group Ebitda was underpinned by a robust performance in the mobile business and effective and sustainable cost management. The mobile business continued its growth trajectory in service revenue while the overall sustainable cost management programme outperformed management’s expectations.”
Telkom will publish its results on 31 May. Its shares were quoted up 13% at R43.83 apiece shortly before midday in Johannesburg.
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Duncan McLeod is Editor of TechCentral, on which this article was first published here.