Telkom’s underlying operational earnings remained under pressure despite an increase, the telecommunications giant reported on Monday.
“The group’s financial performance indicates a challenging industry environment,” CEO Sipho Maseko said in a statement.
The increase in earnings was driven by several once-off items, but the interim results indicated that underlying operational earnings were still under pressure.
For the six months that ended on 30 September, Telkom recorded a profit of R2,9bn after tax.
Maseko said the weakened rand and lower payments to mobile operators also contributed to Telkom’s profit margin.
According to the company’s interim results for the period, released on Monday, the operating revenue increased slightly by 0,3% to R16,2bn.
“[This was] due to higher mobile data and Business IT service revenue, partially offset by lower fixed-line voice revenue,” Maseko said.
Operating expenses decreased by 18,1% to R10,3bn.
Maseko explained that it was due to the R2,2bn net curtailment gain and the R389m provision for the Competition Commission fine that was included.
“Excluding the gain and Competition Commission provision in the previous year, operating expenses would have increased 2,4%,” said Maseko.
“The group reported headline earnings, excluding the net curtailment gain recognised on the post-retirement medical aid liability, of 224,2c from 101,1c.”
Telkom recorded a net revenue of R13,2bn and earnings before interest, tax, depreciation and amortisation of R6,1bn.
Maseko said the group was encouraged by the increase of 50% to R303m in mobile data revenue.
“For the 2014 financial year, management has taken a prudent approach to cap its capital expenditure to R6,5bn while the group reviews its options, particularly in mobile,” he said. — Sapa
