Telkom’s start-up mobile unit continues to bleed red ink across the telecommunications group’s income statement. The unit, which operates under the 8ta branding in the consumer market,will turn in a R2,2bn loss before interest, tax, depreciation and amortisation in the year to end-March 2012.
The operator expects basic earnings per share from continuing operations (in other words, excluding Nigeria’s Multi-Links) to plummet by at least 90% compared to the previous period.
The sharp fall in earnings is as a result, Telkom says, of the recognition of a net loss of R950m on the disposal of Multi-Links mainly due to the “cumulative amount of exchange differences previously recognised in equity, now recognised in profit and loss”.
In addition, the company is impairing iWayAfrica, its African business outside SA and Nigeria, to the tune of R550m. 8ta will burn another hole in the income statement due to its R2,2bn loss.
Telkom also experienced higher depreciation of about R670m as a result of the review of the useful life of network equipment as it builds next-generation infrastructure.
Earnings will be bolstered by lower employee expenditure as R739m was spent on voluntary severance packages in the prior year, Telkom says.
Headline earnings per share are expected to be at least 25% lower than 2011. The net loss on the disposal of Multi-Links and the iWayAfrica impairment do not impact on headline earnings.
Telkom is expected to release its full-year results in the second week in June. The share price was trading off more than 2,5% in afternoon trading after it announced the expected fall in earnings. Shortly after 2pm it touched a new multi-year low of R22,50/share.