Telkom shareholders have taken a dim view of the telecommunications operator’s earnings update for the six months ended 30 September 2015, pushing its share price sharply lower on the JSE on Tuesday.

The company earlier warned shareholders that it expected its headline earnings per share for the six months ended 30 September 2015 to be as much as 85% lower than the same period a year ago, though when normalised, the figure could be as much as 15% higher.

At lunchtime on Monday, Telkom was trading down by more than 5,6% at R67,13/share, giving it a market capitalisation of R35,9bn. Earlier, it had touched an intraday low of R66,87, a loss of almost 6% on the session.

Telkom explained that the discrepancy between reported and normalised headline earnings per share was because of the cost of voluntary severance and retirement packages, which amounted to R1,5bn (R325m a year ago) to let go of 3 108 employees. There was, however, a related tax benefit of R446m (R91m a year ago).

Basic earnings per share were expected to be between 45% and 65% lower, though the normalised number was likely to be between 10% and 30% higher, Telkom said.

The improvement in the normalised earnings figures was the result of lower employee expenses flowing from the reduction in the number of staff in the prior year as well as higher profit on the sale of properties.

However, these benefits were partly offset by the higher accelerated depreciation of assets.