Shares in telecommunications group Telkom slumped R1.60 (Less than US $1) or 4.82% to R31.60 (about US $4.1) on the JSE (Johannesburg Stock Exchange) today after the group announced losses incurred by its mobile business in a trading statement.
According to I-Net Bridge, Telkom advised that its headline earnings per share from continuing operations for the six months ending September 2011 were expected to be at least 40% lower than previously.
The group announced normalised headline earnings per share from continuing operations of 265.7 cents in 2010.
“The decrease is mainly attributable to the losses incurred by the mobile business,” Telkom said in a statement.
Its basic earnings per share from continuing operations are expected to be at least 70% lower, mainly attributable to the losses incurred by the mobile business and the impairment of iWayAfrica of approximately R450 million, it said.
In 2010, Telkom also announced normalised basic earnings per share from continuing operations of 260.2 cents per share in 2010.
Telkom Mobile incurred a loss of approximately R900 million (about US $ 114.2 million) for the 5 months ended August 2011, “but is progressing satisfactorily and is in line with Telkom’s expectations”. The overall subscriber base grew 86.3% to 882,235 revenue generating customers from the start of the financial year.
Post-paid customers grew by 490% while prepaid customers grew by 56%. The growth in prepaid customers was lower than expected because of sub-optimal distribution channels which have now been expanded, Telkom said.
The blended ARPU as at 31 August was R61.97 (US $7.8), an increase of 174% compared with 31 March 2011.
Operating expenses, including mobile was at the same level as the comparative period. This excluded the impairment of the investment in iWayAfrica of approximately R450 million (about US $57.1 million).
Telkom said that iWayAfrica’s performance was impacted by higher customer churn and the weakening of exchange rates. Excluding the impairment of iWayAfrica basic earnings were expected to be at least 40% lower than the comparative period in the prior year.
Telkom said its results for the six months ended September 2010 would be restated to reflect the entire investment in the Multi-Links business as an asset held for sale.
According to the press statement, the operating loss of approximately R200 million (about US $25.4 million) as at end August 2011, suffered by this operation would be disclosed as earnings from discontinued operations.