As expected, Telkom has turned in a weak set of financial results for the year ended March 2012. Headline earnings per share have slumped by 33% to 324,7c, with the number of fixed lines in service falling below 4m for the first time in decades.
As a result, the group’s board has decided not to pay a dividend to shareholders and to reinvest the money in its network.
The fixed-line penetration rate has fallen to 7,9% of the population, from 8,3% previously.
However, there were a few bright spots in the results: 8ta showed in subscriber numbers over the past year, up by 213,2% to nearly 1,5m, although it turned in a multibillion-rand loss, and the number of broadband ADSL subscribers rose by 10% to 827 091.
The mobile business weighed heavily on the headline earnings number, as did R605m in additional depreciation related to a review of the useful life of network equipment. This was partially offset by R739m in voluntary employee severance package costs included in the prior year.
Operating revenue declined by 0,7% to R33,1bn, while group Ebitda margin decreased to 25,8% from 28,1% a year ago. Ebitda is earnings before interest, tax, depreciation and amortisation. Fixed-line Ebitda margin rose from 36,8% to 38,6%.
Free cash flow generation was R2,1bn, down marginally from R2,2bn in 2011.
“Telkom faces many challenges at the moment, but we will advance calmly, determined and focused on delivering on the promise of our business and strategy,” group CEO Nombulelo Moholi says in notes accompanying the financial statements.
“It was a year of clean-up and consolidation across the Telkom group,” Moholi says. “Our strategy going forward is clear and focused.”
The 2012 results include an R896m loss relating to the disposal of Telkom’s failed Nigerian operation, Multi-Links, where it’s estimated it has cumulatively lost more than R10bn. There’s also an impairment loss of R569m related to its other non-SA African business, iWayAfrica.
Given the financial pressure Telkom is under, its board has elected not to pay a dividend for the 2012 financial year.
“While our current financial position should allow us to fund network transformation and build our data-driven mobile offering, the board has decided that it is prudent to allow for more internally generated funding for the capital expenditure planned for the next three years,” says Moholi. — (c) 2012 NewsCentral Media