Telkom South Africa to Write Down Assets by 12 Billion RandRenee Bonorchis and Chris Spillane
Telkom SA SOC Ltd., Africa’s largest fixed-line operator, said it will write down the value of its assets by 12 billion rand ($1.2 billion) to reflect the company’s lower share price and implied net asset value.
Other considerations included “the returns from some of the legacy assets of the group which are below commercial norms as a consequence of technology changes, competition from mobile operators and an evolving regulatory landscape,” the Pretoria-based company said in a statement today.
Telkom shares fell as much as 2.1 percent and had declined 1.9 percent to 16.04 rand by 10:25 a.m. in Johannesburg. The stock has decreased 4.5 percent this year and on May 6 reached the lowest level since the start of trading in March 2003.
Telkom, which is almost 40 percent owned by the South African government, said in April that full-year earnings fell at least 20 percent as it battled tougher competition from mobile and broadband companies. Earnings per share excluding one-time items from continuing operations will be as much as 2.44 rand lower than a year earlier, it said today.
The impairment charge is a non-cash item that won’t affect the group’s cash flow, the company said. “It is akin to an accelerated depreciation charge.”
The telecommunications company was fined 449 million rand by the country’s competition tribunal in April for abusing its dominant position.
Telkom is due to release its results for the fiscal year ended in March on June 14.