Telkom to report muted half-year performance
Telkom said on Friday that it’s revenue will remain flat for the six months to end-September, despite the growing demand from South African consumers for fixed and mobile broadband.
Though basic (Beps) and headline earnings per share (Heps) will rise by between 20% and 35%, this is not a measure of the underlying operational performance but rather the result of a significant decline in finance charges and other factors.
“Notwithstanding the strong performance in earnings, the trading environment remains challenging. Telkom expects to sustain its top-line revenue compared to the prior year and grow its profitability slightly ahead of revenue,” the company said.
Heps will increase by between 25% and 35% and Beps by between 20% and 30% compared to the same period a year ago, Telkom said. “This was mainly due to a significant decline in finance charges, fair-value movements and foreign exchange losses compared to the prior period.”
These declined by 35% to R659-million. This is because:
- Telkom’s funding strategy and the ongoing settlement of maturing debt resulted in finance charges reducing by 25% to R541-million. “Our conservative funding approach enabled us to strengthen our balance sheet by repaying maturing debt of approximately R1.1-billion in the prior financial year, with R900-million repaid in the first half of the prior financial year. In the first half of the current financial year, we settled a further R100-million maturing debt. Our funding strategy allowed us to balance our cost of debt ratio to 52:48 floating to fixed. This ensures that the risk to changes in interest rates remain balanced.”
- Fair-value movements and forex losses reduced by more than 90% to R17-million due to currency volatility and a favourable forex foreign exchange hedging position.
The difference between Beps and Heps is due to the impairment of assets and profit or loss on sale of assets.
Telkom will publish its interim results on 9 November.