In the six months from April to September, Telkom budgeted to spend R234m after tax, paying for retrenchments and voluntary severance and retirement packages, as it looked to cut costs in an increasingly competitive telecommunications landscape.

The mainly fixed-line operator, which is still 40% owned by the South African government, told shareholders on Monday that it expects normalised headline earnings per share to be between 10% and 20% higher than the 224,2c reported in the year-ago period. At the same time, normalised basic earnings per share were expected to climb by between 80% and 90% from the 140,6c reported a year ago.

The increase in normalised basic earnings for the six months are mainly as a result of lower payments to mobile operators resulting from the reduction in termination rates; lower asset impairments and write-offs; and a decrease in expenses relating to the groups post-retirement medical aid liability, Telkom said.

This was offset somewhat by lower foreign exchange gains as a result of the implementation of hedge accounting from 1 October 2013, which resulted in certain foreign exchange gains and losses not being recognised in earnings in the current period as well as higher tax.

Telkom is expected to report its interim results for the latest six-month period of 17 November. The results will include the provision for retrenchments as well as a “net curtailment gain” recognised on the the group’s post-retirement medical aid liability of R2,2bn in the same period a year ago. — (c) 2014 NewsCentral Media