Telkom Mobile Business to Miss March Break-Even Target on Costs

Telkom SA SOC Ltd. said its mobile business would miss a target of breaking even by March as a weak South African economy and rising costs holds back the unit.

“Our initial expectation that the mobile business would break even by March 2016 has been tempered by the operating environment and cost pressures,” the Pretoria-based company said in a statement on Monday. “We are however confident that we will maintain the current positive revenue growth witnessed in this part of our business.”

South Africa’s biggest fixed-line operator, about 40 percent owned by the government, is trying to grow its mobile business to offset falling use of landlines and boost its Internet offering. The outlook for the company “remains challenging on the back of lower growth expectations, higher interest rates and rising inflation,” Telkom said.

Telkom shares declined 0.8 percent to 63.50 rand as of 9:42 a.m. in Johannesburg, valuing the company at 33 billion rand ($2 billion). That extended the fall for the calendar year to 1.3 percent.

Revenue gained 7 percent to 7.2 billion rand in the three months through December, Telkom said. Operating expenses climbed 13 percent while mobile-data revenue was up 56 percent. The company extended its debt-maturity profile by raising a 1 billion rand term loan.

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