Telkom Says 2013 Earnings Will Be at Least 20 Percent LowerChristopher Spillane
Telkom South Africa Ltd., Africa’s biggest fixed-line operator, said full-year earnings fell at least 20 percent as it battled against tougher competition from mobile and broadband companies.
Headline earnings per share, which were 324.7 cents in the year through March 2012, will be more than a fifth lower in the fiscal year just ended, the Pretoria, South Africa-based company said in a statement today.
Bpi Capital has forecast headline earnings per share for full-year 2013 to be 178.4 cents per share, 45 percent lower than 2012, analyst Kate Turner-Smith said by e-mail.
Telkom fell as much as 4.6 percent, the most since March 15, and was down 1.6 percent at 14.45 rand at 4:27 p.m. in Johannesburg. It will report a more specific earnings per share guidance ahead of its full-year results, which will probably be published on or about June 14, the company said.
Telkom, almost 40 percent owned by the South African government, appointed former Vodacom Group Ltd. Chief Operating Officer Sipho Maseko as chief executive officer on March 28 as it seeks to boost growth and meet a target to help deliver broadband to all South African citizens by 2020.
The South African government blocked a bid by South Korean telecommunications company KT Corp. to buy 20 percent of Telkom last year, saying the company is a strategic asset to the country. The previous CEO Nombulelo Moholi resigned in November after Telkom struggled to raise capital to expand broadband and mobile services.
The biggest challenge for new CEO Maseko will be to turn around Telkom’s business in South Africa, which has contributed to three consecutive years of declining revenue.
Telkom’s fixed-line traffic, measured in millions of minutes, fell 70 percent in eight years through September 2011, according to Bloomberg calculations from Telkom earnings statements, while the number of fixed lines dropped 15 percent.
“If I was the incoming CEO I would throw the kitchen sink at the results,” Bruce Main, a fund manager at Ivy Asset Management Ltd., said by e-mail. “I would want to see a decent turnaround in six months; failing this at least a year. If there is no material turnaround then I would be afraid that these negative earnings would continue.”
Vodacom and MTN Group Ltd., South Africa’s largest mobile-phone operators, were growing data revenue three times faster than Telkom in 2011, which started its 8ta mobile-phone unit a year earlier.